Bankers Anonymous

There is a new national pastime which is gathering momentum at the moment and it has the potential to be right up there with drinking pints - banker bashing. In the wake of the sudden fiscal meltdown of last year it was decided that the blame for all our woes lay squarely at the door of a handful of a few arrogant and unscrupulous bankers. It fits very neatly with the media jingoism but is it strictly true? Is there not adequate blame to distribute to a few more areas?

Large areas of the landscape of this country have been disfigured by a frenzy of second rate, misguided development. We have a new phrase in the lexicon, the “ghost estate” - developments which began close to the end of the frenzy and which now sit unfinished at the edges of towns and villages all over the country. A scandal and an undoubted scar on the landscape.

But why have they come about, why was such development relentlessly undertaken in the face of unambiguous warning signs from every quarter? I find it bewildering to think that at no point was an adequate assessment done of our actual housing need and development sanctioned on that basis. Why was planning permission handed out for forty , fifty , sixty and more unit developments in small provincial towns without some reference to what was actually required to meet demand? Is it not within the remit of the planning authorities to assess such demand and grant planning on that basis, particularly as we had already had a decade of full throttle building and common sense would have suggested that the end had to be nigh?

During the boom relationships between builders/developers and their bankers were initiated and developed in the rosy, warm glow of full employment and insatiable consumer demand. As a consequence the symbiosis between banker and builder grew into a veritable force of nature - the banker sanctioned large collateralised loans thereby growing market share and driving the share price skywards, the builder got all the credit he needed to keep producing his product which he then sold at large profits. Everyone was happy.

Now put yourself in the shoes of the banker - you have built up a strong professional relationship with a developer over say a ten year period, he has never let you down and you have no reason to suspect he ever will. One of the last loans sanctioned was for a development that now lies unsold. Now our problems begin. But the notion that all of those problems are our friendly banker’s fault needs to be examined.

Local authorities were still handing out planning permission. The good word coming from our government, our economic think tanks, the institute of auctioneers was that the housing market was as buoyant as ever, demand was strong and there was nothing whatsoever to worry about. In the face of all this sweetness and light a loan was sanctioned to a customer with a flawless history. Not the most reckless decision ever made, I would have thought.

The propaganda which came down from on high created a nice, warm fuzzy feeling which bore no resemblance to what was actually taking place. The ESRI, IAVI and every known stockbrokerage firm in Dublin were to be heard daily on the airwaves with their cosy forecasts about , at the very worst, a “soft landing” for housing. These were the experts, why wouldn’t we buy into what they were telling us? David McWilliams was the only one who tried to inject a bit of harsh reality into the debate and he was summarily dismissed as a crackpot, a begrudger. He looks like a genius now. Vested interests talked the situation up and up until before we knew it we were teetering at the edge of the plank with no idea how we got there.

But we got there, and there we will remain. Our leaders have been desperate in recent months to be seen to have some idea as to how to get us out of here. According to themselves they had no idea that this was where we were headed in the first place so confidence in their ability is not exactly at an all time high. But “we are where we are” as Mary Coughlan would say and what we desperately need are ideas, any ideas.

One that the cabinet appear to have hung their hat on is something called the knowledge economy. As far as I can establish this consists of every Irish person in the future being employed in the production of microprocessors, scientific research and development and financial services. It’s not clear from the plan at this stage whether we should hold back a few bricklayers just in case the mixers are ever switched on again.

The logic of talking up our knowledge based economy is not apparent coming as it is from a bunch of politicians who have just carried out the first in what will be a series of savage cuts to our education system. Now unless I’m missing something, the basis of a knowledge economy is, surprisingly enough, knowledge, which can traditionally be gained through education. Reducing teacher numbers, increasing class sizes and reintroducing third level fees while simultaneously talking up our knowledge credentials and potential makes this cabinet look downright crazy.

It should also bring into the debate the place of the Irish language in our schools. We, contrary to popular opinion, enjoy no competitive advantage over our European neighbours in the realm of education. Countries such as Poland and others of the former Eastern bloc are rapidly assuming the mantle of best educated (and cheaper) workforce available.

From the age of five through to eighteen, our students will spend up to 20% of their time in the education system grappling with the Irish language. Most will graduate from secondary school unable to speak it with any degree of fluency.

Now take some of that massive chunk of classroom time over that thirteen year period and devote it to the teaching of something which is more applicable in the world economy, European languages perhaps.

If Mr. Cowen and company are serious about tooling up our kids for the knowledge economy rather than merely throwing it out as a buzzword to buy himself some time, then we need to have a debate about how to maximise the benefit of our kids’ time in the classroom. Streamline the teaching of Irish, that’s all I’m suggesting - these desperate times surely justify it.