How I love Irish politics. We definitely have our problems here, but all in all, the country is quite humane and compassionate. I think we will be very lucky in the coming financial downturn.
Fat cats are solely to blame for financial crisis
Sunday, October 12, 2008
By Vincent Browne
These are bewildering times. Nobody has any idea whether the world economy will collapse in a few days, weeks or months.
Nobody seems to have a plan to save the world from the looming disaster - and nothing tried so far has worked.
The debate between the US presidential candidates last Tuesday night seemed abstracted from the potential catastrophe.
John McCain and Barack Obama addressed the issue as though it were merely another campaign debating point, rather than the survival of the social and political system to which both are committed.
The scale of the possible disaster is terrifying. The president of the World Bank, Robert Zoellick, said last Thursday that, ‘‘while people in the developed world are focused on the financial crisis, many forget that a human crisis is rapidly unfolding in developing countries. It is pushing poor people to the brink of survival.”
The number of malnourished people globally will grow by 44million - to 967million - this year, according to the World Bank.
The crisis will also have devastating effects on people elsewhere in the world. In America, the richest country in the world, the poverty level, as measured by the US Census Bureau, will rise appreciably from its current level of 35 million.
The proportion of the black population in poverty will rise from the 25 per cent mark to around one-third.
Incidentally, wasn’t it extraordinary that Obama - the first black presidential nominee of either major party, and the candidate more likely to succeed - has not mentioned the impoverishment of the black population in either of the debates so far?
How could a black nominee contribute to the invisibility of the phenomenon? If that is what it takes to become president, is it worth it? Likewise in Europe and elsewhere in the ‘developed’ world.
The financial billionaires have taken a hit from the financial crisis - and, very likely, there are more hits to come.
But do you remember the night that Lehman Brothers was going to the wall? Limousines were lined up outside the bank’s Wall Street headquarters to ferry the directors home - the same directors who had personally made billions of dollars out of the reckless, financial scavenging in which they had engaged for more than a decade.
Did you see Richard Fuld, the chairman and chief executive of Lehman Brothers, acknowledge to a congressional committee how he had taken millions from the company he had wrecked? Last year, this gent earned $45 million. From 1993 to 2007, he received nearly half a billion dollars in total compensation.
Fuld may have to sacrifice an executive jet or two, but he is unlikely to share the fate of tens of millions around the world whose lives have been devastated by his greed and recklessness.
Of course, the financial crisis in Ireland is not the sole creation of the Fianna Fáil-PD governments of the last 11 years. The worldwide financial crisis has played a major part in precipitating the crisis here. But Fianna Fáil and the PDs have contributed to it massively.
They fuelled the property boom, which they must have known would end in tears - not for them, but for hundreds of thousands of others.
They courted - or at least held hands with - the property developers, many of whom became billionaires. They spent, spent and spent, while cutting taxes - particularly taxes that affected the rich: income tax and capital gains tax.
Now, having devastated the tax base, they will ravage the lives of hundreds of thousands by committing them to poverty, misery, poor health and early deaths, for these are the direct results of the inequality that they created and will now deepen.
Mary Harney’s initiative last Thursday, even by the standards of this deplorable government and of the despicable PDs, was breathtaking. Just when the government was risking the economic lifeblood of this society in order to rescue the powerful and wealthy financial institutions, she was proposing to take life savings and homes from the poorest and most helpless old people to finance residential care.
As Eamon Timmons of Age Action asked: ‘‘Does it mean that an older person who is medically assessed as being in need of full-time medical and nursing care, but who refuses to sign up to the new charging arrangement whereby he would pay 80 per cent of his income and up to 15 per cent of the value of his estate, would be refused essential care by the state?
‘‘In effect, it means that people who have been paralysed by stroke or who are suffering from dementia will be charged in a completely different way to people who, for example, have a heart attack or are being treated for cancer.”
In spite of this crisis, we still have a hugely wealthy society. The average income for every man, woman and child is around €36,000. Nobody would be in want or have their life chances compromised if everyone had such wealth. The problem is how it is distributed.
The ‘Masters of the Universe’ in the banks, for instance, think they are individually worth in excess of €2 million.
The government believes that the balance of the economy would be disturbed if this were to be pared back - hence the massive bailout now under way for the institutions, so brilliantly managed by these Masters of the Universe.
Brendan Drumm, whose performance has been questionable since he took over the management of the Health Service Executive (HSE) - aided and abetted by Harney - thinks it is okay for him and a few of his colleagues to share a bonus in excess of €1 million.
Is this justified on the basis that he would be earning far more than €450,000 had he remained a hospital consultant?
Obviously, it did not occur to him that this is very much part of the problem and that his mentality - which, one assumes, is widely shared in the medical profession - is a major part of the problem.
The Irish solution to the financial crisis seems increasingly a piece of madness that could impoverish this country for generations. If any one of the financial institutions now guaranteed goes under - and the likelihood of that happening seems to be increasing by the day - then this society could be saddled with a debt of something like €20 billion to €150 billion.
This would cripple the economy here for decades. Would it not have been preferable to commit to the survival of, say, AIB and the Bank of Ireland by a state takeover, and let the others go to the wall if necessary?
Isn’t it extraordinary that we have allowed our societies to become vulnerable to the vagaries of the mere facilitators of its functioning, the financial institutions?
How did we ever allow them to become so much a central part of our societies? How ever did we justify giving these penny-pushers such vast wealth and power, so much so that their greed and recklessness now threaten the economic future of our societies?
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