I’d like to say that Morgan Kelly is an idiot. I’d like to tell you that he has been consistently wrong in all his predictions about the Irish economy. I’d like to inform you that this man has no idea what he’s talking about.
But I’m afraid I can’t.
Morgan Kelly is far from a fool. He has been consistently correct in his predictions and he knows precisely what he’s talking about.
The man who foresaw the banking crisis long before almost everyone else, who was ridiculed and dismissed by Bertie Ahern’s legion of halfwits, has written an article in today’s Irish Times that should scare the living daylights out of any thinking Irish person.
In Kelly’s own words, Ireland is facing economic ruin.
Tracing the source of the economic disaster back to Brian Lenihan’s absurd banking bailout in 2008, Kelly describes how Professor Patrick Honohan, the incoming governor of the Central Bank, could have used his international stature to reverse Lenihan’s original act of stupidity, but instead compounded the error by taking the ECB’s side and insisting that the banks’ losses were manageable.
A fool’s pardon might be available for Brian Lenihan, a man who manifestly failed to understand the fundamentals of the brief he held, but Kelly leaves no such room for Honohan. Accusing his fellow academic of the costliest mistake ever made by an Irish person, Kelly has laid responsibility for the unfolding Irish disaster at Honohan’s door.
This is a very grave charge to make against the man everyone hoped would rid the Central Bank of its complacency and incompetence, but Kelly doesn’t stop there. He goes on to accuse Honohan of undermining Lenihan when, for once, he was doing something right in resisting the so-called “bailout”. As Kelly puts it, Lenihan was deftly sliced off at the ankles by his central bank governor.
He goes on to provide an interesting insight into who Ireland’s real friends were among the powerful nations. The IMF’s plan to impose a savage haircut on bondholders was shot down by none other than the United States, in the form of treasury secretary Timothy Geithner, while the only voice in our defence came from the old enemy in the person of UK chancellor George Osborne, though of course, a word of caution is in order here. Sir Humphrey might well have advised the chancellor to speak up in Ireland’s defence knowing that his position would be defeated.
But still. A topsy-turvy world indeed when some of our citizens will shortly turn out to protest against the visit of the English Queen, while others will flock by the thousand to fawn over the leader of the country that consigned us to our doom, and to prance about like leipreacháns while he holds up an embarrassing half pint of Guinness for the cameras.
That’s Ireland for you. Never mind the reality. Stick with the illusion.
In the end, Ireland’s bankruptcy was guaranteed by the European Central Bank, which had no thoughts of rescuing this country. Ireland will be destroyed in order to frighten Spain into behaving as Trichet wishes it to, and it seems his strategy is working. The bailout could never work, because the sums don’t add up. We will shortly be facing debts of €250 Billion (with a B). As Kelly says, try to imagine the Bank of England’s insisting that Northern Rock be rescued by Newcastle City Council and you have some idea of how seriously the ECB expects the Irish bailout to work.
An apt analogy indeed, since the citizens of Newcastle had about as much responsibility for the recklessness of Northern Rock as the average Irish person had for the six private banks that killed our economy through their greed and stupidity.
While it’s too late to make the bondholders carry their share, since Lenihan rushed to pay them all off last year, Kelly offers a solution that he concedes wouldn’t be painless but might at least avoid the coming disaster. First, withdraw the bank guarantee immediately, and force the ECB to deal with the issue of insolvent banks. Second, cut government borrowing to zero, right now.
Does he think the politicians will have the guts to confront the ECB?
No. He doesn’t.
I wish Morgan Kelly didn’t have such a way with words, but unfortunately, he’s on the button with his brutal analysis of the political reality.
It is easier to be led along blindfold until the noose is slipped around our necks and we are kicked through the trapdoor into bankruptcy.
Brace yourself for the drop. It will be short and unpleasant, but its consequences will be permanent.
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I thought GW Bush had imposed an extreme burden on US citizens when I wrote this. Little did I think that our government would soon go on to impose a far bigger burden on the Irish people, perhaps three or four times as large.