Cassandra 2012 Headline Animator

Friday, 27 January 2012

Kenny is Right: The Irish Were Greedy

Taoiseach Enda Kenny has raised the ire of his fellow citizens by suggesting that their greed was at the root of the Irish economic collapse. How true is that?

About six months after I arrived in Portlaoise there was a release of apartments in a luxury block under construction next to the O'Moore Park GAA ground. People queued overnight to buy and they were all sold within the first hour. Some signed up and paid deposits for two or more units. Their motivation had nothing to do with a desire for a home. They believed that they would make a killing either from the rent they hoped to receive from future tenants or by selling on at a profit.

That is one example among many that illustrate the veracity of Enda Kenny's words yesterday when he said that the country had gone mad during the property boom, driven by greed. In Portlaoise not only were there more houses and apartments being built than there were ever likely to be buyers or tenants for. In addition several retail complexes were under construction or planned. Even then there were many empty units in the town centre and in each of the recently completed shopping centres. Some of these have now been occupied, but elsewhere businesses have closed leaving even more vacant premises.

This was the story right across Ireland. In our five years living here my wife and I have taken several short breaks in various parts of the country and in every town and village we've stayed or passed through there are newly built estates. At the height of the boom homes were being completed at a rate of 90,000 a year; enough to replace the whole of the previously existing housing stock within a decade. Anybody who had the temerity to suggest, as some did, that this rate of construction could not be sustained was condemned for talking down the economy.

Atmosphere of Affluence
The government was enabled to keep the level of general taxation down in part because of the revenue generated through stamp duty, a transaction tax imposed on every purchase. Social welfare payments and public sector incomes soared. But it is also unfair to read into Mr Kenny's words the suggestion that individual citizens were the only group on whom he was placing blame. I have indicated elsewhere my view that one of the underlying causes of the atmosphere that prevailed during those years of madness was the amount of money pouring into Ireland from tax payers in the wealthier nations of the EU.

In that atmosphere with new infrastructure under construction across the nation, brash new shopping centres and estates of homes described by their developers as "luxury" or "executive" even when all too often they were anything but, it was inevitable that people would forget the old adage "never a borrower or a lender be". It was easy to forget the reason why the system of hire purchase that enabled my generation to furnish our homes on so called "easy payments" was described by our parents as "the never-never".

As affluence increased steadily through the second half of the twentieth century and at an increasing pace in the first few years of the twenty first it was easy to ignore such seemingly old fashioned notions. It was all too easy to believe that, whilst it might be difficult to pay the mortgage today, tomorrow's salary increase would make it easier in the future. The more luxurious our neighbour's home and contents the more luxury we wanted for ourselves. That is the nature of greed. It feeds on itself, creating a sense of false security in its victims. Like a drug, it creates a craving that can never be satisfied. And, like a drug, when it is denied it leaves its victim with unbearable withdrawal symptoms.

As I indicated in that earlier post it is unreasonable to blame foreign tax-payers for wanting their governments to seek recompense. I can quite understand why Mr Kenny is both eager to demonstrate Ireland's willingness to repay her debts by paying off the most recent instalment to bond holders and to try to explain to the leaders of those wealthier nations how his country incurred such incomprehensible levels of debt in the first place.

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