Belfast Telegraph

Making history, but for all the wrong reasons

By Brendan Keenan

Tony Blair once said that he felt the hand of history upon him, which most people thought was a bit over the top. But there is no mistaking the hand of history walloping you across the chops.

These are historical, as well as historic, times in Ireland. In a little over five years, we will have the centenary of the 1916 Rising. Since anniversaries work backwards, this year we are marking the 90th anniversary of the foundation of the State.

I say ‘marking’, because there is nothing like the ceremonies which will be held at Easter 2016. It was a foreign journalist who first pointed out the oddity of this to me. There is no Irish Independence Day, almost no official recognition of independence at all. Amid all the current talk of losing our sovereignty, it was the ghost of Patrick Pearse, not WT Cosgrave, which was regularly summoned. You only have to say it like that to see the problem. Independence was a fudge: perhaps a necessary fudge, but one with tragic consequences. Last week, it was hard to escape the feeling that almost everything since has been a fudge as well.

Perhaps we should have made more of the fact that the UK itself had to send for the fire brigade in 1976, and Chancellor Dennis Healy brought in a budget proportionately bigger than next year's planned €6bn in cuts for the Republic.

That was a year, ironically, when the Republic Ireland was being a model of fiscal responsibility, under Liam Cosgrave and the intellectual input of Garret FitzGerald.

The uncomfortable fact is that the public finances have been the dominant economic issue ever since. We know now, with hindsight, that the only time they were stable in those 33 years was a brief period in the late 90s.

Don't forget, the IMF was very nearly here before when, in the early 1980s, the National Treasury Management Agency was down to the last bank willing to say ‘yes’. It will be a dangerous delusion if we think the present situation is some kind of aberration, requiring only a change of government and five years of austerity.

The reason this crisis is so severe and intractable is that it was caused by excessive private debt, not public. Public debt is more visible, and the mechanisms for curbing deficits are tried and tested. But the absence of any coherent Irish philosophy on tax and public spending meant this private borrowing was allowed to spill over and create unsustainable public finances,

So history will wallop Brian Cowen. I am not sure that he is very much to blame for the bubble, and I am not sure that, given the severity of the crash, external funding could ever have been avoided.

But his will be the name on the application form for the outside assistance and that is what the history books will record.

Or will they? The banking rescue has to happen soon, but could the public finance rescue possibly be delayed until after an election? Technically, it could, which may explain the constant, and apparently futile, insistence by the Taoiseach and his ministers that the country is fully funded until next year, and that no application for assistance has been made.

Last week, the well-known London-based analyst David Roche said he was buying Irish bonds because, if the Republic does not default, they are the bargain of the century. He sees the extraordinary actions being taken as proof that it will not be allowed to default. Whichever way it goes, history is in the making.

Belfast Telegraph