Archive for May 21, 2012

Closing the stable door before the horse has voted

After the weekend’s orgy of ball sports, the fun continued in Ireland last night with the blood sport of democratic debate around the Fiscal Treaty referendum – and by extension, Ireland’s ability to access ESM funding – beamed live and direct via the Frontline.

The outcome of the debate, and with it the referendum, are irrelevant.

The ESM is essentially a mechanism designed to save the euro; alas, events have in Greece and Spain have overtaken it, and it is now not worth the paper a Yes or No poster is printed on.

Quite simply, it no longer adds up – if it ever did.

Should there be a run on Spain’s and/or Italy’s banks and a bailout of either or both is needed, the cupboard will be bare when Ireland returns for its inevitable second bailout.

No Yes vote in the world will bring stability to that situation; in fact, the only thing that can bring stability in that situation is massive blood-letting from investors who, faced with the bankruptcy of Europe and the end of the European project as we know it, would finally be forced to realise the risks we have until now taken on their behalf.

For the most important question in this referendum is not a new one; it has simply been posed to the wrong side thus far in the debate.

From the outset, the No side has been asked where the money will come from if we vote No. The real issue is where the money will come from if we vote Yes to enshrining austerity in our constitution and to signing away our fiscal sovereignty forever.

Once all this is done, where will the money come from when the Spanish and Italian banks have hoovered up every available cent?

Once again, events have overtaken our lumbering democracy and our slow-witted politicians, whose lemming-like inability to understand the situation puts the European and global economies in clear and present danger.

The ESM is no magic bullet. Even if it was, it is nowhere near capable of bringing down the runaway beast that is Europe’s debt problem.

For over three years governments have tried and failed to put a sticking-plaster of austerity on the gaping wound of bank debt, and they are still stunned that it doesn’t seem to be working.

What is needed now is to do the unthinkable and embrace a very radical solution that will bring this crisis to a shuddering halt and let us get on with recovery. That solution would be to let banks fail, write down sovereign debts that have been taken on in an attempt to save them, and let states make an organised exit from the euro if they wish.

Not only is the ESM not the radical solution that is needed, it’s no longer any sort of solution at all.

Rubbing Salt in Angela’s Wounds

Angela Merkel addresses the Greek people.

As the euro slides inexorably towards the abyss, it’s hard not to feel that Angela Merkel has, like Tony Blair and George W Bush, sacrificed her legacy on the altar of her ego.

Reports today say that she suggested that Greece hold a referendum on euro membership alongside its general election on June 17.

The cracks in the euro are not beginning to show, as they have been visible for a long time – but now, we are finally seeing the daylight in between them.

With the Greeks voting for chaos, and Ireland being bullied into voting yes to decades of austerity, there is one fact that is worth remembering above all else.

Every single thing we were told would stabilise the euro has failed.

Blanket bank guarantees have failed. Bailouts have failed. Austerity has failed.

Given these three embarrassing strikes, it is only fair to assume that the ESM will fail too, given that the architects are the same.

They keep rolling the dice, and they keep coming up with nothing.

And once more, it will be because of simple mathematics.

Rumblings this week suggest that Spain is in trouble, and as we have seen in Ireland (remember “the cheapest bailout in history”?), these rumblings often turn out to be worse than first thought – a whole lot worse.

The speculation around Spain (and France, and Italy) suggests that the bailout this time will be measured in the trillions.

That is money that Europe doesn’t have, no matter what way Greece or Ireland votes. No ESM will be able to save them.

The markets, of course, know this and they have priced it into their calculations.

The head of trading at a Swedish bank told me as much recently, saying that the euro in its current form would soon be a memory.

He’s not a man who gets calls like this wrong.

This market reaction is why an increasing number of countries are now outside the bond markets, with little chance of getting back in.

Plenty more will join them soon.

But instead of doing the one thing that would quicken the return to the markets – a purging of bank debt – Angela Merkel continues to insist that austerity is working.

Like Veruca Salt, she wants it all, convinced that she can have austerity and growth at the same time.

She might want it all, but she’s going the wrong way about getting it.

And if she keeps insisting she can have it, she’ll be headed off down the chute to join Blair and Bush as political pariahs, destroyed by their own hubris.

It’s something that neither of us draw any comfort from, but for once I find myself in agreement with Declan Ganley.

The immediate solution is to purge the bank debt; the future of the euro – if there is to be a future – will be to greater harmonise the disparate economies that make it up, so that they can no longer fall out of step as drastically as they have done.

In short, with a little more sensible regulation and a purging of debt, the solution to Europe’s problems could we be exactly the same as their cause.

It’s called capitalism.

Scorn not simplicity

“Can I add you on Facebook…?”

It’s been a busy few weeks, not least in every nook and cranny of the perfect political storm that Ireland has evolved into. I’ve been working around the clock, but when Jack Murray invited me to attend the Media Future Conference in Dublin I got on a plane.

It was a fabulous event, full of inspiration and innovation; it was also a practical example of the broad range of skills that Jack and his team possess.

It was a great idea, well-executed, and the one word that kept cropping up when I tried to evaluate it was ‘simplicity’.

There was so much common sense spoken during the event that it made you want to rush out of the room and strip everything you do back to the bare bones of what matters, what resonates, what generates content and context and ideas and revenue.

Unless you were Seán Gallagher.

Forget the social media tale, Seán was the marquee name.

Everyone wanted to hear about the tweet and the consequences and the race to the Aras. But if this was to be the first step in his public rehabilitation, it fell some way short, and why?

Because it lacked simplicity.

The interview by Jack was not so much a chat as a Gallagher diatribe, and it was a complex beast – he battered Sinn Féin and RTE with barely-concealed, well-prepared glee, and he repeated much of the material about his businesses and his youth work that formed the basis of his campaign.

That campaign was a very careful, cunning construct, in that it erased Gallagher’s past as a bag man for Fianna Fáil and pitched him as an independent instead.

It almost worked.

What was new – and appalling opportunistic – was his shoehorning himself in alongside Father Kevin Reynolds, the priest libeled by the Prime Time Investigates program.

There is simply no comparison between the two.

Gallagher complained that RTE ignored his requests for meetings and claimed to be ”gobsmacked by their arrogance,” without ever wondering why that might be so.

Could it have been that legal action was threatened or mentioned? Or that it would be imprudent to preclude the BAI investigation? Could it be that, with the Fianna Fail cat out of the bag, Gallagher knew he was done for?

RTE are an easy target at the moment – the Prime Time libel was utterly indefensible, but for Gallagher to come in on its coat-tails is risible, and no amount of massaging of the narrative can change that.

What killed his campaign was not the tweet – it was the fact that, like a game of Cluedo played out on social media, Gallagher was placed in Hugh Morgan’s farmyard, with the envelope, and a cheque for Fianna Fáil.

Game over.

Gallagher claimed, and not for the first time, that he never got negative; again, the narrative is being massaged.

As soon as the €5000 donation was brought up during the campaign he went on the offensive, immediately referring – unprompted – to Morgan as “a convicted fuel smuggler.”

He denied knowing Morgan, but seemed to know him well enough to invite him to an event in return for five grand for Fianna Fail.

He clearly knew this was coming, but somehow he hadn’t prepared an adequate defence.

Alas, he refused to answer Jack’s questions about what had happened that morning when Gallagher was tipped off about the coming attack.

His attitude towards McGuinness, businesswoman Glenna Lynch and Hugh Morgan was venomous, and it was that venom which caused his presidential facade – and his vote – to collapse.

It struck me at the time, and I told Jack afterwards, that it would have been better to have someone else interview Seán, someone not as intimately involved in the campaign as Jack was. SOmeone who would ask the hard questions.

But Gallagher was never going to answer the hard questions, so in hindsight it was almost more revealing that, given a free run, Gallagher chose to over-egg the omelet of his own victimhood. Again, his past in Fianna Fail went virtually unmentioned. But not unnoticed.

The former presidential candidate was whisked in and out of the building to take part in the conference, which was a shame.

Had he stuck around and attended some of the excellent workshops, he might have learned something – such as the value of keeping it very simple and owning up to your mistakes.