Haha, I hear you laugh, because that's what I'm thinking, what has economics got to do with morals. Well, it more to do with right and wrong and the way that morals and personal value systems can often tilt the equation. What is right in love and friendship and family life may not be right in economics, business and finance.
Try to figure this one out. Under intense pressure of some sort, a finance minister, close to death, accedes to the demands of the banking sector and commits the Irish people to a debt that may end up lasting generations. Granted, his government and the political party of which he had been a senior member for several governments, did oversee the accumulation of this debt, so to some extent it was their responsibility.
There appears to be no doubt that our financial regulatory system failed. How it failed is a matter for historians and investigators. I can't see what happened inside that closed box in the central bank. But I can tell you that the outcome led directly to our financial crisis. Many ordinary people participated in that failure. Pretty much anyone who stretched themselves to take on a mortgage failed in their judgement.
There are few innocent parties. So anyhow, the country gets bailed out to pay off overseas investors. Why? Because we were at risk of bringing the whole Euro system down and triggering a confidence collapse that would drag Greece, Portugal, Spain and Italy down. Of course if they all went bankrupt, who was going to finance the German, French, Dutch, Swedish and other banking systems that had dumped trillions upon trillions into these economies in the form of low interest high risk loans.
This is where I begin to moralise. The blame lands on the head of the Irish banking system and our regulators. Our lenders did not exercise proper judgement in the conduct of their affairs. The banks were nationalised and millions of investors in bank shares got burnt. The country gets penalised with a high rate of interest on the bailout funds and the people get screwed into the dirt.
Almost a million jobs disappear over night. Property prices, the primary assets of 70% of the population plunge in value. Bankers continue to receive bonus payments. unwanted bankers retire on generous pensions. The boys and girls who oversaw the destruction of an entire economy shuffle quietly into the shadows and obscurity. Few are called to account.
I know I haven't mentioned developers, but I don't want to get myself too worked up. There was no end of corruption, incompetence and negligence from those whose job it was to ensure that Ireland Inc. conducted its affairs properly, namely our public services. Yet, they squeal indignantly when anyone attempts to call them to account. I'm not going to elaborate, it has all been said before.
My real point is; where did the money for the bailout come from? It came from those countries who claimed their whole financial future and integrity had been put at risk by the actions of Irish Bankers. Yet they could afford to stump up more money. Now they get back the money we owed them from the banks and they get to loan our government that same money and charge an even higher interest rate on it so we, the Irish fools can give it back to them again.
That last paragraph covers a whole wad of moral issues. But more to the point, how did those banks come to be so exposed to Irish debt? Did their own financial regulatory processes not protect them? The very nations that condemned Irish fiscal recklessness failed to monitor their own banks and question their exposure. It is something I don't understand.
The moral structure appears to be that the one with the most is always right. So they bully the less powerful and manipulate matters to their own benefit. There never appeared to be any contemplation of risk sharing. Never was there any question of the powerful nations accepting any of the blame for this sorry state of affairs, yet on a more human moral basis, the pain should have been shared more equitably.
Ireland has been screwed and German, French and Dutch fiscal ineptitude has been covered up. We need a campaign of awareness across Europe. The whole European and indeed, World Financial System is a house of cards. It is without real substance and is without any connection to assets of output.
The multiplier effect on which the loan to asset ratio is based has grown out of proportion to any rational business model. Banks are built on foundations of quicksand. The whole structure and system is driven by greed. Sustainability has nothing to do with it. Someone powerful directs a breath of air in the right direction and the house falls down. Of course, these high value players have already taken their vulnerable assets out of play. They have cashed in their chips early.
Now they sit back and wait for the dust to settle, before generously offering to purchase worthless assets for a pittance, out of the goodness of their steel hearts. And so the cycle begins again.
In the face of such greed, and rampant incompetency amongst European regulators, collectively, Ireland deserves a significant debt write off. Natural justice on the other-hand would not allow for such leniency. Because under natural law, the weak get eaten by the strong. Ireland only deserves a break when we look to the higher values of human nature. Those that lifted us above nature in the first place.
Or does civilised behaviour really exist? Is the concept of civilisation simply that - a concept. Do we live in a real and tangible world, is human society simply figment of our imagination put there by the manipulators and string pullers who live in the shadows, or in such plain sight as to be overlooked?
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