Ulster Bank shows a rotten political system the way to go

Today’s Irish Times reports (as I suspected) that 88% of the mortgage loans being sold by Ulster Bank are more than three years in arrears and 60% are more than four years in arrears. The banks are not allowing that situation to recur with more recent loans. They are taking action sooner and, to be fair to those who are critical of the banks, they are not handing out 100% mortgages nowadays either. There was a time in the late 90s/00s when you were almost mugged if you went into a bank and didn’t come out with an extravagant loan that you didn’t want or need and couldn’t afford. Nevertheless, the key element (in the part of the Ulster Bank package that I’m interested in) is the lack of engagement by borrowers with the Bank.

 

The way the Ulster Bank decision was reported on the news yesterday by RTE’s business correspondent (who is a good reporter) was significant: his body language betrayed surprise at what was happening because of its significance. It is the sort of robust action that happens elsewhere but not in this State. It a consequence of globalization, I have to admit, and it trumps the nudge, nudge, wink, wink way the Irish State operates. We have rules for everything but very weak enforcement. There are exceptions like drink driving but it took a generation to change cultural habits there, which are still far from perfect. Nevertheless, anyone who fails a breathalyzer test on the side of the road nowadays will be arrested, prince or pauper. We need that sort of robust approach to the enforcement of all rules, civil or criminal. RTE’s business correspondent made it clear that, as a result of Ulster Bank’s move, borrowers who have failed to engage with their lenders for three, four or more years would be well advised to do so now. That is the key lesson that I hope professional advisers of all non-engaging borrowers will communicate to their clients.

 

There is a lot of nonsense going on at the moment about forcing the banks to lower mortgage interest rates. The politicians won’t face up to the real problem, a good part of which is the very large number of people who have refused to engage with their lenders about non-performing mortgages for nearly ten years now. Nor, in general, will economists or commentators or the media generally acknowledge the real problem as they are afraid of being accused of being too tough. (It is called doing your jobs.) The majority of those refusing to engage with their lenders are probably FF or FG supporters and because the number is so large they know that the Government won’t let the banks touch them. So, those of us who never missed a mortgage payment are paying off mortgages, worth millions or even billions, on behalf of people who refuse to pay them because of our rotten political system. We are also paying additional taxes, which makes it a triple whammy: our own mortgages, the mortgages of other people and additional taxes. That is simply not acceptable.

 

I suspect that most of the borrowers who stopped paying their mortgages did so because they fell on hard times after 2008. Fortunately, the situation has now improved and statistically many (though no doubt not all) of the borrowers who were unable to pay after 2008 could and should have resumed at least some payment by now. That is the nub of the matter.

It should also be pointed out that the refusal of such a large cohort of borrowers to engage with their lenders has probably forced other people into difficulty, including out of their homes. Today’s Indo says that it is probably not a significant number, and I’m inclined to agree, but there is no doubt that many people are struggling to make monthly payments that are higher than they would be if those who have refused to engage with their lenders for almost a decade now stopped behaving in such a typical and selfish Irish fashion. This is a very, very selfish society, not least because we always have weak governments that do not impose discipline on a state that is not naturally self-disciplined like, say, the Nordic states.

 

I hope AIB and BoI follow Ulster Bank's lead although we can take it as read that the Minister for Finance will not allow them to do so. There will be an election within twelve months. Maybe after that, if a stable Government is formed.

 

 

1916 And All That

The 1916 Rising was legitimate. Whether it was well planned and executed are fair questions but the right of the Irish people to evict the invaders since 1169 has never been in question. Nor could it be. What is very much in question is the wisdom of the IRB in cancelling the cancellation of the Rising. In addition, their knowledge of the importance of the economic dimension to independence (keeping the nine counties of Ulster in an independent state) was poor because, like today’s politicians in most countries, the leading Nationalists of the day were ignorant of economics. They were also partitionist although they did not admit that to themselves (any more than this state does today). So there are many grounds for criticizing the Rising but not the right of the participants to rise.

 

It was only with the Good Friday referenda of 1998 that the right of the Irish people to remove the Normans/English/Scottish/British from Ireland was brought to an end. The Second Dail consisted of TDs elected in 1921 to the House of Commons of Southern Ireland (as a result of the Government of Ireland Act of 1920) plus five TDs elected to the House of Commons of Northern Ireland – Collins, Dev, Griffith, Sean Milroy and Sean O’Mahony, four of whom (all but O’Mahony) were elected to both “parliaments”. It was decided that Collins, Dev, Griffith and Milroy would have one vote each on the Treaty. Had the vote on the Treaty taken place on the basis of the 1918 election and had it been carried (unlikely), the right of the people of Ireland to evict the British forcibly would have ended with the Treaty debate. However, as a partition parliament it did not have that right.

 

Although there was no law here in 1916 there was power, the power of the British state to impose their laws on this country. There was a considerable degree of de facto acceptance of British law, particularly after Catholic Emancipation (Ireland was effectively lawless for centuries before 1829 and that includes before 1169, something that has contribute heavily to the semi-anarchic nature of this state today), which led to the emergence of a Catholic middle class, many of whom were happy with British rule (today’s FG essentially) but who would also have been happy with the joke Home Rule on offer later, not least because (as with the Scottish and Welsh home rule Parliaments today) it would have meant jobs for the boys (FF all the way). It is clear, however, from the Repeal Movement and the Monster meetings under Daniel O’Connell and later the Home Rule movement under Parnell and Redmond that the bulk of the country wanted repeal of the union. How to repeal the union was a question of tactics where the perennial question came into play: politics or violence. Politics had a good run of it after 1800 and only ran out of steam during WW1 (a fairly violent affair itself).

 

It was the Famine, which is never really discussed here, that set Nationalist Ireland on the road to 1916. There was a grim determination on the part of the survivors that the British had to be removed from Ireland. The physical survival of the people was at stake. As stated above, there was a serious failure to address the best way to do this while bringing the Scots in the north east of the country along – the most valid criticism that can be levied at the Nationalist movement from the Act of Union to 1921 - but that, as also stated above, was because most Nationalist leaders were ignorant of economics and in twenty two or twenty three of the twenty six counties wanted partition. The partitionist nature of both parts of Ireland can’t be stressed too often. If it is to be overcome, as it must for all our sakes, North and South, it must be openly acknowledged. The leaders of the Irish Free State didn’t realize in 1922 that independence without the north east was a recipe for failure. Their successors today still don’t realize it. The same is true of Northern Ireland. David McWilliams column ("A nation once again", SBP, 15 May 2016) is a blackboard piece (looks good on a blackboard, which doesn’t argue back) and is of limited value (not least because Whittaker Economics is going to run out of steam here) but accurate insofar as it is clear that N.Ireland has no future without the rest of Ireland, Brexit today or Brexit in ten years time or Brexit never.

 

We made the task of state building even more difficult by refusing to take steps to seriously curb emigration. That decision was taken for class reasons: those who had jobs had better pay than if emigration had been lower and emigration was a safety valve that allowed a rotten political system to survive (until it nearly destroyed the state in 2008). Emigration also deprived the state of the energy and drive that is essential for state building. We tried (as we always do) to find a short cut through Whittaker Economics. Using FDI as a basis for our prosperity is bringing us up a cul de sac. At 61, I hope to make it out of this world before we reach the wall in that particular cul de sac but I wouldn't bet on it.

 

If the legitimacy of the 1916 Rising is rejected, as it has been by some, rejecting the legitimacy of the uprising in the Six Counties from 1968-1998 would be consistent with that. The corollary is also true, however. If, as the powers-that-be have been saying ad nauseam for the past six weeks or so, the 1916 Rising was legitimate then the uprising in the North from 1968-1998 was also legitimate.

 

There are those who, on principle, reject the concept of revolution against “lawful” authority (i.e. whoever is carrying the biggest stick at any given time). They tend, not surprisingly, to be privileged people. I don’t embrace lightly or casually the right of people to engage in violence but the notion that people never have the right to rebel against authority would mean, for example, that Hitler’s regime could not be indicted for the Holocaust. The Nazi Party was the legitimate government of Germany and the lawful authority (using a Burkean analysis) throughout those parts of Europe between 1940-44 where the Holocaust occurred. You would have difficulty sustaining Burke’s argument after the Holocaust and very few people would try. The reason the argument is deployed in an Irish context is to justify the betrayal of this State’s sovereignty since 1972. It is more about the EU than 1916. The link between the betrayal of sovereignty after 1972 and the rejection of the legitimacy of the Rising is that FG and FF (or Fianna Gael as they now finally are since the formation of the new Government) represent a class of people, who, since the 1970s, have become tired of independence and genuinely wish to surrender it. (Having worked in the public service for thirty five years believe me I can see their point and I know many people who share their view.) Fianna Gael, Labour, the media, most of the chattering classes, etc., etc. know they can’t surrender the State to the UK (their preferred choice) so they have settled for the second best option: Germany.