Getting our house in order ahead of the boom meant sweeping State debt under the private carpet
USUALLY, CURRENCY designs are specific to cultures. Previous Irish currencies, for example, carried images of Irish leaders, writers and thinkers. But the euro went for a bland, contentless imagery that defined as little as possible. The coins carry some nods to national particularities, but the notes are decorated with drawings of anonymous structures and buildings: gateways, windows, bridges – stylised computer-generated images of edifices that do not exist.
Ireland, like the other participating countries, was to be drawn into a placeless empire, of which the single currency was the most visible symbol.
Last week we were rather rudely dispatched from this placelessness and returned to our own history and geography. In failure and disgrace, “Ireland” is deemed still to exist. For as long as prosperity lasted, we were told that it was down to the benefits of membership of the euro zone – but it seems our failures are the consequences of our own stupidity. As far as the EU-IMF bailiffs were concerned, we are a delinquent element and therefore both dependent and expendable, a country that is no longer quite a country except for the purposes of being fitted with a dunce’s cap.
It is strange, too, how we ourselves have reverted to speaking about nationality and sovereignty, how the protest against the austerity measures was held, for example, outside the GPO. This sudden hankering after our nationalist past is reminiscent of the way people tend to find religion when bad things happen.
It is not, of course, a “bailout” for us, but a 60-year punitive mortgage at loan-shark rates, designed not to save Ireland but to staunch the haemorrhaging of the single currency project. It is a bailout for the foreign banks that lent our banks the money to create in Ireland a hyperdemocracy of debt. It casts Ireland as a severed artery, on which a makeshift tourniquet has been clumsily put in place, in the hope of rescuing the doomed folly that is the single currency.
The slow, odd way we slipped into this crisis has led us to adopt certain analyses on the hoof, without more than a glance at the bigger picture. We blamed the banks, individual banking personalities, domestic politicians – accusing them, not implausibly, of recklessness and incompetence. We essayed comparisons with the recession of the 1980s, when the causative circumstances were quite different. We focused on the use or misuse of domestic instruments, when the only one that might have saved us – domestic control over interest rates – had already been surrendered.
Underneath the surface cacophony of rage and recrimination that defines our public conversation right now can be detected another chord – of self-blame on account of having “lost the run of ourselves”. This contains just enough substance to repress any truly comprehending anger. There are enough guilty secrets out there – concerning SSIA accounts, credit card splurges and holiday homes in Bulgaria – to guarantee the relative passivity of the Irish public as the promised decades of austerity are ushered in.
But let us at least be clear among ourselves: whatever craziness may have overcome the Irish public in the past decade or so was an all but unavoidable byproduct of the changes taking place as a result of the spectacular economic shifts instigated by the introduction of the common currency. We voted for this, but did not understand what it would mean.
Six, seven, eight years ago, dizzy with the idea of an economic and cultural transformation, we took the dramatic changes to our culture and public spaces for granted, as the promised flowering of European convergence. We looked at these strange coins and notes in our purses in much the way we scrutinised the lanky Poles and Latvians who served us cappuccinos. We didn’t exactly understand what had happened, but we were not about to look its bounties in the mouth.
For nearly a decade from 1999, interest rates – directed at German conditions – hovered below Ireland’s rate of inflation, which meant that, in a certain warped sense, it was foolish not to be heavily indebted. With all the appropriate fiscal and financial levers long since surrendered, the nation’s prudence went on automatic pilot as we persuaded ourselves that, all things considered, we had been very smart to get ourselves hooked into this euro caper.
In preparation for these massive shifts in economic culture, we had to get our house in order. This meant sweeping State debt under the private carpet by transferring much of it to private mortgages.
The Maastricht criteria involved requirements that national debt not exceed more than 60 per cent of gross domestic product, and that governments not borrow more than three per cent of spending needs. Ireland met these criteria, more or less, largely by diverting borrowing from the public to the personal arena, using stamp duty to cream off revenues from the housing bubble.
This means that citizens will continue to pay for years on their mortgages the cost of State services incurred perhaps a decade or more in the past.
Our fate, in other words, was sealed not in September 2008, or even on January 1st, 2002, but on June 18th, 1992, the day we voted for the Maastricht Treaty.