Revelations by the ‘Irish Independent’ newspaper of taped telephone conversations between two senior Executives in the recently deceased Anglo-Irish Bank have aroused rage amongst a population already angry with bankers.
The expletive strewn – “we have to get the money in . . . get the fuckin’ money in, get it in” – and sometimes juvenile conversation – singing a comedy version of Deutschland Uber Allies – appears to show the two Executives planning to rope the Irish State, through the Central Bank, into bailing out Anglo to the tune of €7 billion, a number “picked out of my arse” as one Executive put it. (The real figure proved to be over four times this amount!)
The cynicism and arrogance on display is summed up by their bragging that their losses are greater but that, once hooked, the state will have to keep on paying – “The reality is that, actually, we need more than that. But you know the strategy here is you pull them in, you get them to write a big cheque and they have to keep, they have to support their money” – while boasting that they would never pay it back.
On last nights’ ‘The Last Word’ radio programme the presenter Matt Cooper asked,in a tone of utter exasperation, whether this was a tipping point in the Irish population’s restrained reaction to the crisis, a crisis that has caused riots in other countries. Would it lead to them . . . demanding a real inquiry into the banking crisis . . . because they needed someone to BLAME. One of the interviewees however explained that inquiries are about finding out the facts.
The Government and opposition politicians have now rallied round a demand for another inquiry and the debate now will focus on what sort of inquiry will result. Already however the call for an inquiry is being predicated on the view that the taped conversations demonstrate that the State was hoodwinked into bailing out the banks, particularly the exceptionally rotten Anglo-Irish.
I’m reminded of the words of the song from Alanis Morissette – “It’s the good advice that you just didn’t take. Who would’ve thought… it figures”. That is because the State was not hoodwinked. The State may well have been lied to, but the State turned round and lied to the Irish people. Now the Irish State wants an inquiry, perhaps, all of five years afterwards so it can blame those already reviled and hated. This, so that it can continue to play the lead role in defending the banks and the economic system they sit upon.
The Irish State, its politicians and bureaucrats, claimed in September 2008 that the banking crisis was simply one of liquidity – the banks weren’t bust, they simply needed some cash to tide them over and then everything would be alright. Basically the banks were solvent.
I claim no great powers of insight or clairvoyance when I say that I knew at the time that this was crap. There were numerous voices, with no inside information, who knew it was crap and said so. The inside information known to everyone that mattered would have proved it. The Irish State was lying to save the bankers, the banks and the system. This should not be a surprise for this is what the State is for.
And not just the local State, because the last five years have revealed that not only was it in support of bailing out banks that could not be saved but this was also the view of the European Union and the US Treasury.
Certainly, blame the banks for reckless and stupid lending but it was not the banks who made their debts the crippling burden on the people. It took the State to do that. Blaming the banks is a way of avoiding this, much harder to accept, reality. Much harder to accept because we have just proved that you can change the government at the top of the State but you won’t change its role. For the bleeding-heart liberals, and I include the leaders of the trade unions in this, this is especially a problem because the State is their only hope of making things better.
But there is an even more important reason to agree with the interviewee in the Today FM programme: that the point is to understand. And what we have to understand is that the Irish bankers were not the only bankers to indulge in reckless lending. It happened in the US, in Spain, in the UK and many other places right across the world. It is happening in China today. Criminal speculation is an inevitable part of economic booms under capitalism and cycles of boom and bust are an inevitable part of capitalism.
Blaming excessive credit expansion is fine, except that such expansion is inevitable in a boom – the bigger the boom the bigger the expansion of credit. The problem is the system that makes credit expansion necessary. No amount of regulation in a boom will prevent it. New financial products, such as derivatives, or new institutions, such as a shadow banking system, are inevitable in a system defined by private property in the means of producing the wherewithal to live. Blame greed – ok, but what other social pathology makes sense in the current economic system? Blame the politicians – but how is the state to function without funding from the finance system?
In any new inquiry we will be invited to blame individuals, to which the implied answer is – ‘lock them up’, more power to the state, and individual banks, to which the answer is – ‘close them down’, when the real solution is to dismantle the economic system that makes such events inevitable. Anglo will be made the focus of attention and held up as a rogue bank but Allied Irish cost almost as much and Irish Nationwide appears to have been even more rotten, however hard that may be to believe.
This view that the core and fundamental problem is the economic system and that the financial crisis and all its consequences are a result of it is not widely shared. Yet the crisis demonstrates this dramatically. Understanding this is an important and vital step to putting things right. It is obvious that no State-backed inquiry could arrive at such conclusions. We have had inquiries already which have been more soporific than enlightening. That means the opportunity and necessity exists for the working class, or part of its movement, to launch their own inquiry to demonstrate the truthfulness of these claims.
Trade unionists should demand the unions launch their own inquiry. The Left should campaign for this and if this fails it should launch its own inquiry, inviting evidence from workers in the banks and from left economists who can set out the mechanisms by which capitalism inevitably produces such crises. An open forum of hearings and invitations to give evidence could provide the platform to educate workers and ourselves. It might also invite proposals for alternatives.
In this respect the Left would do well to ponder the lessons to be derived from one part of the taped conversations. In one recording, a Mr Bowe and another senior executive of Anglo, Peter Fitzgerald, are heard laughing about the prospect of nationalisation. They see it as “fantastic” and are delighted at the prospect of becoming civil servants. This, of course, is exactly what happened. Why then would nationalisation be proposed by people calling themselves socialist?