It was like a script out of Monty Python. Fine Gael and Labour propose a vote of no confidence in Brian Cowan and then Fine Gael decides to embark on an internal civil war over its own leader Enda Kenny.
The government was laughing all the way to the bank! Or in this case two banking reports into the south’s banking crisis which last week confirmed the key role that Irish government policy played in creating the conditions for the meltdown of the banking system and the catastrophic impact that the global economic crisis has had on the 26 county’s economy.
So, instead of the Taoiseach under pressure and being forced to seriously consider an election which would allow the public to finally have a say in the government’s mismanagement of the economy, Cowan was off the hook courtesy of an internal attempt to heave Enda Kenny out.
And while Enda has survived this round the questions and concerns over his leadership will not have gone away – you know.
Meanwhile the Dublin government has largely avoided at this time having to face up to the two reports into banking which were published by Patrick Honahan, who is the Governor of the Central Bank and international banking experts Klaus Regling and Max Watson, run up to September 2008.
Both reports are heavily critical of the Coalition Government’s economic policy, the financial regulation system, and the lending policies of Irish banks. They also lash out at the credit rating agencies though they don’t deal with these in much detail – suggesting instead that the banking inquiry investigate the matter further.
The banking inquiry will start over the summer, run for six months, and be defined by these reports and an Oireachtas Committee’s suggestions for terms of reference.
Among the major problems identified by Central Bank Governor Patrick Honohan are:
The Government’s domestic macroeconomic imbalances contributed hugely to the crisis
• Bad lending choices and falling property values meant that at least two banks - Anglo Irish and Nationwide - were always going to go bust
• Irish financial regulation was characterised by excessive ‘deference’ to the banks and ‘timid’ responses when problems were found
The Regling/Watson report looks at the background to the whole problem and finds that:
• Government economic policies increased the dangers of a crash in both the property and banking sectors – causing a recession that was deeper and longer than necessary and elsewhere
• By the middle of the decade the financial and property boom in Ireland presented features in which ‘financial stability analysis’ should have ‘sounded alarm bells loudly’
In his response the Taoiseach said he took full responsibility for the decisions which are being blamed for much of the current mess.
But then he sought to claim that the reports vindicated the approach taken by the government to tackle the crisis!
Not true. Sinn Féin had been warning for years about the disastrous consequences of the economic policies being pursued by the government and of the cosy relationship between Fianna Fáil, developers and bankers.
In statement after statement Sinn Féin called for; stronger regulation; caps on remuneration; an end to property inflation; fair tax policy based on stable direct taxation; corporate law to be improved; a tax on speculative trading; and counter-cyclical budget policies.
Sinn Féin stood alone in our warnings among the political parties. Fine Gael and Labour also wanted to feed the bubble – they wanted to lower direct taxes and abolish stamp duty in 2007, all of which would have added fuel to the fire.
That same year at the Sinn Fein Ard Fheis this blog had warned:
“This is the era of the Celtic Tiger. But it is also the era of the rip-off, of stealth taxes, gombeenism, corruption, strokes and scams…
For ten years there have been unprecedented revenue surplus available to the government here. In the last five years alone there has been an exchequer surplus of almost €40 billion.
The government has the ability and the resources, if they so chose, to deal effectively with poverty and inequality. They chose not to do so.”
The fact is that Brian Cowen and Fianna Fail-led governments recklessly managed the economy. They created the current financial crisis.
And they haven’t learned from these mistakes. The Government is still pursuing bad policies. Its approach is to cut, cut. Intelligent economists say this is deflating the economy.
Fine Gael and Labour haven’t learned either. They agree with Government policy, they just have a different set of cuts.
It is clear that citizens are fed up with the domination of the two big parties and are demanding change. People are increasingly aware that Fine Gael is no different to Fianna Fáil.
And the Labour Party still appears intent on putting Fine Gael into government, even after this weeks debacle around Kenny!
The reality is that a Fine Gael/Labour coalition will not address the deep-rooted inequalities at the heart of Irish society or tackle the vested interests that have caused so much hardship to so many ordinary people.
Fine Gael is genetically incapable of doing this. Why would Labour give them a leg up?