When Irish Eyes Are Crying

Paul Sweeney: Financial journalist Michael Lewis will have an article in Vanity Fair magazine next month, “When Irish Eyes are Crying”. You can read it here.

He wrote the now famous pieces on Greece and on Iceland in the same magazine. I am reading his book “The Big Short” and it is excellent – so well written.

He says that the Irish enjoy suffering! “They will take it and take it and then one day they will go Snappo!”

That will be on the 25th!

He argues strongly against Fianna Fail’s line that we must slavishly pay up every penny that Fitzpatrick, Sheehy and all ran up (for the FF builders and speculators). He says the Irish will have no choice but to default on the private debt (i.e. it is not sovereign debt).

Vanity Fair says “Lewis interviewed Lenihan in an attempt to uncover the man’s reasoning for his actions. Lenihan asserted that he had no choice in the matter. “Under English law,” he explained to Lewis, “bondholders enjoy the same status as ordinary depositors. ” As Lewis points out, this is legalistic—“narrowly true, but generally false. The Irish government always had the power to impose losses on even the senior bondholders, if it wanted to.” When he made the decision in 2008, Lenihan said it was done to prevent contagion. But, as Lewis points out, this wasn’t true either. A year and a half later, Lenihan offered a different reasoning, claiming that the bonds were owned by Irishmen. “The Irish, in other words,” Lewis writes, “were simply saving the Irish. This wasn’t true.” The bondholders were mostly foreigners.

Here is a link to Michael Lewis on CNBC talking about his meeting with Brian Lenihan, Irish Bankers and others and the role of Merrill Lynch in Ireland’s downfall.

Merrill Lynch fired an employee who wrote a report that the Irish banks were over-lending dangerously. Yet Lenihan’s Dept Finance hired ML at big bucks to help shovel the cr*p generated by low / no regulation, low interest rates and shifting taxes from income to consumption and overall low direct taxes which created the financial crisis.

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Paul Sweeney     @paulsweeneyman

Paul Sweeney is former Chief Economist of the Irish Congress of Trade Unions. He was a President of the Statistical and Social Enquiry Society of Ireland, former member of the Economic Committee of the ETUC, a member of the National Competitiveness Council of Ireland, the National Statistics Board, the ESB, TUAC, (advisor to OECD) and several other bodies. He has written three books on the Irish economy and two on public enterprise, including The Celtic Tiger; Ireland’s Economic Miracle Explained and Selling Out: Privatisation in Ireland, chapters in other books and many articles on economics.