Pivot, Brian(s), Pivot! (aka: Éirinn go Brian, while Brians go Brách!?)
Ireland’s Financial woes made the front page of USA Today’s Money section this morning; while less salubrious than making the WSJ’s front pages, this accomplishment is also considerably more frightening as it proves the Irish economy is sickly enough to have attracted the attention of foreign sports fans with a love of colour photography and a fifth grade reading level. Yes, dear reader, our government has screwed-up so spectacularly that we’ve shown up on the radar of the mindless, the dormant, and the ill-informed; no small feat for a country of 4 million with an economy about the size of Los Angeles (or Birmingham).
Having been forced to bow to the inevitable reality of Irish finances, Brian D’oh! & Brian Dumb have reluctantly agreed to accept a 100 billion euro bailout, and you can rest assured that the figure was arrived at only after long careful and exhaustive analysis of the uniqueness of the Irish plight – as well as the fact that Greece took 110 billion in their bailout – and no way were we going to brand ourselves The Biggest Borrowers in the eurozone.
Thinking back over the last year, recalling how many times we heard Brian Cowen insisting that as former Minister for Finance he had seen no warning signs, and how now, as Taoiseach (PM), neither he nor his new Minister for Finance Brian Lenihan could be held in any way responsible for the complete melt-down of the national economy… I am not sure if we’re trapped in an episode of the Walking Dead or just the Fast Spin Cycle of Fianna Fáil’s political washing machine.
The Government’s own report on the banking crisis, published six months ago, in May, admitted that 80% of the Irish problem was home-grown. “Ireland’s banking crisis bears the clear imprint of global influences, yet it was in crucial ways ‘home-made’.”
Allowing that the government has very likely watered down that report (so as to draw attention away from their own failings), leaves us in the awkward position of either:
A) accepting that our leaders were/are completely ignorant (of the actual state of Irish national finances) – or else,
B) recognizing that they knew exactly how bad the hurricane was going to be, and they did everything they could to hold it at bay until it could be blamed on the first available global crisis. (Lords be praised for Lehman Brothers!)
Irish politicians want us to swallow the idea that they are so dim that they did not notice any inherent disconnect between the fact that Irish home ownership is the highest in Europe, versus the conflicting fact that the average cost of any home within commuting distance from a decent job had risen to over 12 times the average annual salary. (READ: every crack-house for sale was totally unaffordable by any stretch of imaginative accounting practices). Given the simple fact that the parliamentary majority is now smaller than the number of vacant seats in the Dáil, and the recent Supreme Court ruling that elections must be held, the case for total ignorance is strong….
However, I am inclined towards the view that leaders in Fianna Fáil knew they’d screwed up, but were simply unwilling to suffer the losses that (they and their property developing pals) would have occurred had the country changed tack earlier – say, for instance, in 2006, when the problems first became evident, or 2007, by which stage, a major (if not lethal) cut to property taxes was the only thing they could do to buoy the already falling Irish property market.
I have of late spent a great may hours talking with investors, and other people who understand finance in real terms, and in these conversations, the word “pivot” has come up a great deal. “Pivot” is shorthand for the idea that investors want companies they’ve put money into to remain nimble, stay awake, and be willing to shift gears in accord with changing market conditions. It is a very reasonable expectation, the advantages of which are well-illustrated by a plethora of anecdotes, like the one about the old laundry detergent company, Wrigley’s, that gave up selling soap in order to focus on growing consumer demand for the new chewing gum they’d begun giving away to promote their detergent.
With an economy the size of Birmingham, nimble should be the hallmark of the Irish economy, yet Ireland remains deeply and painfully mired in the national obsession with home ownership – at any cost.
Today, on the official government web site that gives information on the Irish State, the top two featured links are: Keeping Your Home & Losing Your Job – which is only slightly less depressing than the fact that on 26 May of this year, our Parliament’s legal affairs researchers published a riveting report on the still-thriving practice of debtor’s prison; a report that tells us that over 3.2% of Irish folks in prison since 2006 were put there for failing to pay their debts. Not taxes, mind you, this is about plain old ordinary debt – credit cards, home improvement loans, car loans, and mortgages. The money you probably borrowed when you thought you had a stable and secure job, like say, working for a bank, in Dublin.
“Over one hundred years after the practice of imprisoning debtors was abolished in Ireland, debtors unable to meet their financial obligations still face the risk of imprisonment where they default on a court instalment order. According to the Law Reform Commission an average of 200 persons per year (276 in 2008) are imprisoned in Ireland in connection with civil debt.”
If only Brian & Co. had taken notes at last week’s Smartcamp, instead of spending their time there giving speeches.
