Ireland faces a real financial and social crisis, but nobody wants to talk about it. It's time for Government to take action, writes Bill Hobbs
IN WHAT has become a tragic farce, an Irish Government will plunder its citizen’s retirement savings accounts while insisting on protecting German citizens pension funds. Unable to force losses on bank bond holders, we have ceded sovereignty to a form of home rule.
Our ability to fund economic recovery and respond to a real social crisis is being stifled by other state’s national interest masquerading as European unionism.
It’s ironic that some establishment figures here accept self-limiting, self-determination as being all we can expect at this time. Their position resonates with a Redmondite orthodoxy that once promoted home rule as the only way forward.
Irony aside, Government’s decision to plunder private capital to fund the public purse is a form of fiscal marshal law. It’s a bad judgement call that has opened a Pandora’s Box it cannot close. With comparisons being drawn with Argentina’s nationalisation of private pension funds, the move will amplify an already extensive flight of deposits abroad. Last week's move by the NTMA put what’s left of the national pension reserve fund after recent asset fire sales on term deposit with the banks won't help matters.
Calling its plundering a “small levy” equivalent to deposit interest income tax, was pure political spin reminiscent of the outrageous statements and haughty arrogance of the previous government.
Have politicians not learned yet that deliberate ambiguity and spin no longer holds water with people? After its poor communications performance last week, this Government has yet to demonstrate the authentic honesty and transparency it promised to deliver on.
Plundering retirement savings accounts wasn’t the only shocking story last week. The response to the Master of the High Court, Ed Honohan’s plea to do something urgently to protect vulnerable people from needlessly draconian debt laws and bankers debt collection practices was astonishing.
Demonstrating appalling arrogance, the Irish Banking Federation criticised him for daring to draw attention to people taking their own lives because of their debts. The banker’s trade body showed scant appreciation of the psychological damage wrought by an inhumane legal debt collection system and actions of unscrupulous lenders and debt collectors.
Mr Honohan was entirely correct in exposing a shocking delay in dealing with a real financial and social crisis faced by decent, honest, hopelessly indebted ordinary people.
His stark message contrasted too with Government’s stock in trade, kick for touch response which amounted to “we recognise the need to do something urgently”, so “we are planning to do something” but “we can’t tell you what that something is” and “can’t tell you when the something will be delivered on”. It threw in the usual “a group is looking into it” line and through in moral hazard risk for good measure.
Yet as it is to give billions to banks to fund consumer loan write offs (another name for forgiving debts) all that’s needed is an efficient, reliable non-court based system to arrange for debt settlement and forgiveness contracts between an indebted person and their lenders.
While a legalised system has been drafted by the Law Reform Commission, it is entirely possible to have a working system up and running within six months, while waiting for legislative backing.
Despite the overwhelming evidence and acceptance of an urgent need to do something we are not going to see changes to inhumane debt collection and personal insolvency laws until 2012. In the meantime people will continue to be exposed to unscrupulous lenders and their debt collector’s abusive behaviours and actions.
How many more decent people will take their own lives because they see no way out?
Mr Honohan’s intervention last week set down a clear marker. People’s lives are now in the hands of government minister’s, senior civil servants, lenders and their trade bodies. Talking up steps taken so far, which have manifestly failed to protect vulnerable people, is not the answer. It’s time to cut through procrastination, time to knock heads together and time to deliver.
Last week illustrates how disempowering deference to a higher authority has become. While the Government is planning to raid retirement saving accounts, it cannot provide a financial safety net for people in debt because in making Irish banks whole again, it’s promised German and other countries' pension funds will be protected at all costs. It says people must deal with their lenders on their own without the consumer protection or financial safety net they would be afforded by a humane debt settlement system which could be introduced within months.
Some have ruefully observed how a disempowering deference to one higher authority which ended barely ninety years ago, was replaced in turn by deference to a church and now we are seeing a new manifestation in the form of Irish European unionism that argues we should be grateful to accept our lot, even if this means people take their own lives as we cannot afford to provide for debt forgiveness.
A version of this article appeared in the Irish Examiner, Business Section Monday 16th May 2011
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