Monday, 10 January 2011

How the Irish Keep Their Cool

Hard Times

You know times are bad when you can overhear elderly ladies on the bus using phrases like “the current budget deficit,” as I did recently, on a pleasant autumn morning in Dublin. You know times are really bad when one of them just about knows the figure: “Oh, God, it’s 30 percent or something.” In fact, the Irish government’s deficit for 2010 hit 32 percent of GDP, more than 10 times the legal maximum for countries in the euro zone. It’s hard to find a parallel to such public excess anywhere in the Western world.

The effects of our crisis are everywhere you look. The bus that morning was almost empty. Barely two years ago it would have been packed with Polish and Lithuanian hard hats, dressed in work boots and high-visibility jackets and heading for their construction jobs. Now many of the migrants have gone back home. Construction has halted, and much other work besides. Fine restaurants now offer three-course lunches for just €15. Newspaper lifestyle supplements are full of advice on “looking good for less” and how to cook cheap cuts of meat. Recession chic is the fashion of the moment.

Even the landscape tells of the crash. Besides lacing their daily speech with phrases once used only by economists, the Irish have added a new term to the lexicon: “ghost estates.” It refers to housing developments that were being built when the 2008 crash hit and were left unfinished and empty, formerly expensive real estate now being reclaimed by weeds, moss, and soft Irish rain. An official report in October found 2,800 ghost estates, with a total of 120,000 vacant houses—enough for a midsize Irish city.

People are way beyond broke. The Irish have always responded to hardship by moving on. They don’t revolt, they emigrate—to America, to Canada, to Australia, or just across the Irish Sea to the United Kingdom. But where would they go in these times? Things aren’t that much better anywhere in the Western world.

And even if they were, many Irish feel trapped where they are. In the madly inflated property bubble, ordinary working couples took out €400,000 mortgages for houses that are now worth half that amount. Roughly 250,000 homes—the equivalent of two more midsize Irish cities—are now in negative equity, worth less on the market than the debt that is on them. The owners have no way to raise the cash they would need in order to start over somewhere else.

It’s toughest for the young. Those of us who are into and beyond middle age can find some measure of consolation in our memories of past hard times, of which Ireland has had plenty. Even those who embraced the boom with unabashed enthusiasm seem able to get past it now, claiming to have known all along that it was only a mirage. But the young people have known only prosperity. For them these lean times are no reversion to old and familiar challenges; instead, they’re strange and disorienting.

Many outside Ireland seem baffled by what they regard as the great mystery of our recession: the almost complete lack of organized protests against wage and welfare reductions, shrinking public services, and other cutbacks. Faced with at least four more years of austerity, the government is counting on the public’s continued willingness to take its medicine.

Despite that seeming passivity, people are furious. Mentions of “negative equity” and “the current budget deficit” tend to be peppered with altogether unprintable language. People blame the bankers (especially the casino operation Anglo Irish Bank, which has cost the taxpayers €23 billion so far), the property developers, and the government that encouraged such profligacy in the name of minimal regulation and the free market.

But the rage is trumped by fear. There’s a palpable anxiety at every level: Will I be able to keep up my family’s mortgage payments? Will the state continue to have access to the international bond markets? Will Ireland’s next generation accept the need to pay for the follies of this one?

On his deathbed, the great (and greatly indebted) Irishman Oscar Wilde called for champagne, declaring: “I shall die as I have lived, beyond my means.” Ireland now seems to be making a similar gesture. Government policy is to put on a brave face, insist that the levels of private and public debt are “manageable,” and keep paying whatever it takes to save the banks. But when old ladies on the bus are reciting the figures, it’s not so easy to maintain a Wildean nonchalance.

Report in Newsweek by O’Toole (columnist for The Irish Times and author of Enough Is Enough: How to Build a New Republic.)

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