Despite the challenging times we face, the majority of us are more than capable of weathering the storm, writes SARAH CAREY.
IT’S A bloody good thing Barack Obama didn’t run for office in Ireland. Every “Yes we can” would have been met with a whine of “Oh no we can’t!” Stand up Ireland’s national stereotype – the Victim.
No one dare speak of hope for fear of being called naive. If they claim strength they are labelled smug. If they point to the positive they are called ignorant. There’ll be no fighting on the beaches here. Unless we’re tearing each other to bits over rations of course. Everyone’s oppressed; everyone’s broke; everyone’s about to be put out on the side of the road and no one can give up a single cent without howling like a toddler.
Is that really it? I don’t believe it. I think we’re stronger than that but there’s a national taboo on anyone admitting that they can take a hit and stay standing.
At this point I have to make a quick confession. Just as there are no atheists in a foxhole, neither are there any in an economic crisis. In a streak of atavism I’ve taken to nightly prayers for friends and family.
Taking into account factors such as job security, number of dependants, number of incomes and current extravagances, I make two lists. On the first are those who should be okay and not in need of my appeals. Then there are those who could be in serious trouble. Fortunately the second list is much, much shorter than the first. What separates the two is debt. The under-leveraged will weather most disasters. Pay cuts, tax hikes or even one job loss in a double income house will force a family to abandon consumerism but without resulting in real poverty.
The over-leveraged have no such comfort burdened as they are by repayments. For them I really worry. What has confused me for months though is the disparity between my two lists and the assurances in the media that the entire country is up to its neck in hock. What about those who made extra monthly payments to reduce their mortgage or used the SSIA, stock windfalls and redundancy packages to pay off the capital?
Aware that anecdote does not equal data, I tried to find out how much debt is spread among the population. Unfortunately I perished on the rock named “average”.
According to a report by Goodbody Stockbrokers published last year, the “average” household has borrowed far more than it is earning – €158 for every €100 earned. Back in 1995 that rate was about €50 borrowed for every €100 earned. That paints an appalling picture, but in actual fact tells us very little. “Average” is an overused and much misunderstood term. It does not mean “most” or “normal”. Average simply takes extremes at either end of a scale and comes up with not a whole lot. In a country with a population of 100, if one person owes a million and the rest owe nothing, then “average” debt is €10,000. It’s meaningless.
I checked with a building society, a bank, the Irish Bankers’ Federation, the Central Statistics Office, an economist and a stockbroking firm to see if they compiled figures on loan-to-value ratios for mortgage holders. If debt is all that stands between waving and drowning then this would be important information. The answer? The figures don’t exist and even if they did the financial institutions wouldn’t tell you. The only way to calculate personal debt is to add up all the borrowings, divide by the number of households and spew out an answer called average. When I put forward my theory that the under-leveraged must constitute a reasonable proportion of the population, I was told I was probably right, but it couldn’t be proved.
I tried from the other end. If I couldn’t find out who was safe, could I establish who was in trouble? The Dublin County Sheriff’s office revealed that they have supervised fewer evictions than last year. A total of nine so far this year while last year’s yearly total was 46. Of those that they have supervised some are for local authorities due to anti-social behaviour and entirely unconnected with economic circumstances.
Does that simply mean that people are allowing their homes to be repossessed by agreement rather than enduring an eviction? Repossession orders have increased but the court reports reveal these are in cases of obviously foolish subprime lending, rather than responsible families falling on hard times. As the recession drags on this will change, but for now there is simply no evidence to back up the general conviction that there are widespread loan defaults by ordinary families.
This means that while times might be hard, they don’t have to be disastrous. Just because you get into trouble doesn’t mean you can’t get out of it. This matters. Really matters.
I am under no illusion that the next five years present major challenges for us, both as a country and as individuals. Yet I am equally confident that we had so much fat that we can take a hit and come out the other end of this cycle wounded but still walking. Yet with few exceptions the national conversation is limited to competing bids of vulnerability rather than declarations of fortitude.
The global crash has wounded us, but a national unwillingness to step up is what will kill us off. At a time when we need fighters we’re stuck with protesters. That’s got to change.