Borrowers caught up in wealth illusion
WHEN TAOISEACH Enda Kenny last week attributed the country's economic collapse to a madness for borrowing that gripped the population in the heady days of the Celtic Tiger, he sparked a chorus of howling indignation, some of it from the most unlikely quarters.
But while he may have been guilty of a gross generalisation, we would have to be in a state of total denial to say there's no truth in what he said. The Taoiseach was speaking during a discussion at the World Economic Forum in Davos, Switzerland, last Thursday when he candidly explained that Ireland's economy was bust because ' people simply went mad borrowing'.
Sinn Féin was first off the mark, lambasting the Taoiseach on RTE'S 6pm news on Thursday for blaming the ordinary people when really the blame rested with banks, bondholders and bailouts. Others were quick to join the chorus of condemnation and even Fianna Fáil felt emboldened enough to comment on Mr Kenny's credibility.
There is no doubt that, in blaming the borrowers, the Taoiseach's focus was far too narrow and selective. He could also have pointed out the profit-hungry bankers duped people into taking on loans that were clearly beyond their means. He could have explained in more detail how the Fianna Fáil/ Green Party coalition fuelled the property bubble to reap a harvest of billions of euro in tax revenue - much of which was subsequently squandered. He could have told how thousands of misfortunate people borrowed heavily to buy homes at massively inflated prices because they were convinced by an irresponsible government that property prices would never fall.
He didn't do this though; instead he gave just one, narrow, insight into the boomtime fever that gripped the country. It's understandable that those who were innocent bystanders in the madness feel aggrieved, but it would be delusional to say he was entirely wrong in his analysis.
The Taoiseach's comments in Davos were a very poor fit with his state of the nation address in December when he told the people ' you are not responsible for this crisis', and he rightly stands accused on that point. But we have to accept that those who borrowed to fund lifestyles they felt entitled to, but couldn't afford, did in fact play a part in creating an illusion of wealth that eventually imploded.
After all, if the banks were guilty of reckless lending then others must have been guilty of reckless borrowing. They weren't just the developers and speculators, a lot of ' ordinary people' got in on the act as well. As the Taoiseach admitted, the inconvenient truth is that a hell of a lot of people convinced themselves that their day had finally come and the good times would roll on forever. Second homes in Ireland, apartments for rent in Bulgaria, holiday homes in Spanish resorts, Mercs, BMWS and shopping trips to New York became symbols of our status - and our self indulgence. We know this is true because we saw it happen before our eyes. There is nothing to be achieved from denying it now that we are faced with the bill -- better by far to acknowledge our mistakes and learn from them.
