Vanity Fair Article on Irish Mess

Zynks

The March edition of Vanity Fair (yes, I know) has a long article on the background of our economic crisis. I am still in shock with what I've seen, but mostly that 'our greed' is being exposed so bluntly by such magazine.

LINK

It starts with

when IrIsh eyes are crying
First Iceland. Then Greece. Now Ireland, which headed for bankruptcy with its own mysterious logic. In 2000, suddenly among the richest people in Europe,
the Irish decided to buy their country–from one another. After which their banks and government really screwed them. So where’s the rage?

and then it rolls into 15 pages of a description of a pathetically failed economy.

Personally I am a bit depressed to see such description and our passive reaction being exposed abroad.
Note: I haven't read it in full yet, so hopefully it gets better...

karlth

Michel Lewis, the author, never pulls any punches but some of his comments are just there to sell the magazine.

He wrote an article about Iceland's banking crisis 1-2 years and called us inbreds!

So don't take everything he says too seriously.

Karl (not married to my sister)

Princess Consuela Bananahammock

The article the phrase "tl;dr" was invented for.

Ikky (not married to his sister either)

zig

Zynks wrote: »

Personally I am a bit depressed to see such description and our passive reaction being exposed abroad.
Note: I haven't read it in full yet, so hopefully it gets better...

Ok I havent fully read it myself yet, just a few pages in but ill read more tomorrow,but anyway what Ive highlighted there is nothing to be annoyed or ashamed of.

Honestly, people are looking over at the likes of Egypt and thinking, "why cant we be like that", ill tell you why, because we are not Egypt or Tunisia. We have more than 85% of people who can work working. Of this 85% the majority of them are people who are probably not in negative equity, probably go out and do the things theyve been able to do during the boom, and probably live a relatively financially content life.
So whats left? Theres the 15% unemployed, alot of whom are young and probably dont own houses/dont have their own family, so their dole is keeping fairly tied over. Then theres the rest who recieve other benefits like rent allowance/childrens allowance etc.

So what you have in reality is actually a very small minority of people who are being seriously affected by this whole mess. And these are people who have a massive mortgage and are unemployed. These are the people who are being seriously burned, but there are not enough people to make a loud noise. My overall point is, when your not really feeling the pain, you tend to be more passive about it.

Sorry , i went off in a rant there, just thought id discuss the whole 'passive nature' point of view.

Liam Byrne

I think that's over-simplifying it - it's not just a tiny minority who are badly affected.

Lots of ordinary people are down between €300 and €1,500 a month between pay cuts, overtime cuts, tax increases, etc

If they were single and on €25,000 a year, or had kids and were on €35,000 a year, that's a massive wallop on money that you NEED, rather than discretionary spend.

jimmycrackcorm

Liam Byrne wrote: »

I think that's over-simplifying it - it's not just a tiny minority who are badly affected.

Lots of ordinary people are down between €300 and €1,500 a month between pay cuts, overtime cuts, tax increases, etc

If they were single and on €25,000 a year, or had kids and were on €35,000 a year, that's a massive wallop on money that you NEED, rather than discretionary spend.

It's all relative though. Some of us are much better off now post boom despite the cuts and tax increases. I remember a time not so long ago when paying 48% tax on a tiny income and no chance of buying a home. A time when emigration was the norm so we didn't complain about it.

Permabear

This post has been deleted.

Dannyboy83

Original link now broken.

Article available here instead:
http://www.vanityfair.com/business/features/2011/03/michael-lewis-ireland-201103

Tora Bora

Vanity Fair .............. FFS :D:D

Where's me Beano;)

great article. gives a good indication of how we are perceived abroad. Lewis is slightly sensationalist but generally spot on.

particularly accurate with his depiction of Cowen -

" Cowen happens also to have been the minister of finance from 2004 until mid-2008, when most of the bad stuff happened. He is not an obvious Leader of Men. His movements are sullen and lumbering, his face numbed by corpulence, his natural resting expression a look of confusion. One morning a few weeks before, he went on national radio sounding, to well-trained Irish ears, drunk. To my less trained ones he sounded merely groggy, but the public is in no mood to cut him a break. (Four different Irish people told me, on great authority, that Cowen had faxed Ireland’s 440-billion-euro bank guarantee into the European Central Bank from a pub.) And the truth is, if you were to design a human being to maximize the likelihood that people would assume he drank too much, you’d have a hard time doing better than the Irish prime minister. Lenihan, who follows on Cowen’s bovine heels, comes across, by comparison, as a decathlete in peak condition."

mike65

I just read it, anyone who thinks Vanity Fair is just a light read in the bog probably doesn't ever read it. Some excellent vignetes which capture the utter insanity and denial of same since 2000.

Earthhorse

Yeah, Vanity Fair has published some great stuff over the years. I don't read it regularly but whenever I do I'm always impressed by the quality of pieces such as this.

Zynks wrote: »

Personally I am a bit depressed to see such description and our passive reaction being exposed abroad.
Note: I haven't read it in full yet, so hopefully it gets better...

It doesn't.

On the whole passive reaction thing; the majority probably haven't seen the worst of it yet. The next few years will be a trying time for Irish employers and employees with a huge tax burden and little incentive to work, grow or invest. There'll also be a stream of new graduates coming into a jobs market with no jobs. As the article points out, America is a less amenable avenue for them now, so they may end up staying here (though Europe is possibly an option). And then we have the property market which most agree has yet to hit bottom.

So the anger hasn't come yet but it will. Probably in around two to three years. The cynic in me says this is when the upcoming government will be booted out and replaced by our favourite overlords again.

Zynks

Earthhorse wrote: »

On the whole passive reaction thing; the majority probably haven't seen the worst of it yet. The next few years will be a trying time for Irish employers and employees with a huge tax burden and little incentive to work, grow or invest. There'll also be a stream of new graduates coming into a jobs market with no jobs. As the article points out, America is a less amenable avenue for them now, so they may end up staying here (though Europe is possibly an option). And then we have the property market which most agree has yet to hit bottom.

So the anger hasn't come yet but it will. Probably in around two to three years. The cynic in me says this is when the upcoming government will be booted out and replaced by our favourite overlords again.

I have the same view, and that is a very sad prospect.

Spudmonkey

I love the way this is phrased, reminds me of a remark I heard a year or two back (from an Australian report I think) about how the Irish tried to get rich quick buying houses from each other.

Left alone in a dark room with a pile of money, the Irish decided what they really wanted to do with it was to buy Ireland. From one another.

sceptre

Indeed. It's what made chunks of the Irish mess so similar to the Japanese mess from a few years ago (which commentators have caught on to in the past year or so).

Earthhorse

The phrase that caught my eye in the article was this:

Even in an era when capitalists went out of their way to destroy capitalism, the Irish bankers set some kind of record for destruction.

The first part in particular.

sink

This thread over in the property forum started with Morgan Kelly's article back in 06, the first few pages make for interesting reading.

http://www.boards.ie/vbulletin/showthread.php?t=2055033806

Poly

Lewis on Bloomberg

http://www.youtube.com/watch?v=ol8wJydDiLY&feature=youtu.be

Liam Byrne

Permabear wrote: »

This post had been deleted.

Interesting.........let me have a quick look at my wages now compared to when I graduated in the early 90s........

Then one quick conversion to euro......

Hmmmmmm.......you're wrong.

GSF

The pain hasnt really started yet as we are only starting to close the structural deficit. Give it a year or two.

MyPeopleDrankTheSoup

Ikky Poo2 wrote: »

The article the phrase "tl;dr" was invented for.

Has the Internets ruined your attention span that much, it's a great article, worth the read. Along with the Greek and Iceland one.


I think it's a good thing that Irish people aren't rioting on the streets, what good does it do? I'll bet most of those Greek rioters are just nutty anarchists who are looking for an excuse to fcuk **** up.

zig

sink wrote: »

This thread over in the property forum started with Morgan Kelly's article back in 06, the first few pages make for interesting reading.

http://www.boards.ie/vbulletin/showthread.php?t=2055033806

interesting reading some of the skeptics posting back then, makes me wonder how people will be looking back on threads that are put up these days.

SWoods5000

The good thing about Ireland is that because we're so small and open, the fringe groups like Anarchists and Socialists never get the support because the disgruntled just emigrate rather than hanging around to riot.

I disagree with a lot of people who make such sweeping statements as, "Look where Capitalism has gotten us!" and the like. What has happened in Ireland isn't capitalism, it's a sick mix of cronyism and socialism. The Banks and the bondholders took a punt and it failed. In a Capitalist society, it would have been too bad and the banks would have shut down. However, here in Ireland we wrote blank cheques to bankers and tried to "save jobs" at the expense of the tax payer. That isn't what Capitalism is about at all. In this case blame the Government, blame the bankers and blame the bondholders, but don't blame the system.

Sand

Interesting points for Later10 who has a major issue with Morgan Kelly not breaking down the door to Berties office in 2003:

Morgan Kelly is a professor of economics at University College Dublin, but he did not, until recently, view it as his business to think much about the economy under his nose. He had written a handful of highly regarded academic papers on topics (such as “The Economic Impact of the Little Ice Age”) considered abstruse even by academic economists. “I only stumbled on this catastrophe by accident,” he says. “I had never been interested in the Irish economy. The Irish economy is tiny and boring.

“Around the middle of 2006 all these former students of ours working for the banks started to appear on TV!” he says. “They were now all bank economists, and they were nice guys and all that. And they were all saying the same thing: ‘We’re going to have a soft landing.’ ”

The statement struck him as absurd

it was perhaps in Morgan Kelly’s nature to assume that, if his former students were cast on Irish TV as financial experts, something was amiss. “I just started Googling things,” he says.

The problem for Kelly, once he had these thoughts, was what to do with them. “This isn’t my day job,” he says. “I was working on medieval-population theory.”

“It had no impact,” Kelly says of his piece. “The response was general amusement. It was What will these crazy eggheads come up with next? sort of stuff.”

This time Kelly sent his piece to a newspaper with a far bigger circulation, the Irish Independent. The Independent’s editor wrote back to say he found the article offensive and wouldn’t publish it.

mike65

sink wrote: »

This thread over in the property forum started with Morgan Kelly's article back in 06, the first few pages make for interesting reading.

http://www.boards.ie/vbulletin/showthread.php?t=2055033806

First page and Do-More has it banged to rights

http://www.boards.ie/vbulletin/showpost.php?p=52558688&postcount=19

Permabear

This post has been deleted.

raymann

great article. unfortunately spot on. i remember reading liars poker years ago and then years later meeting a guy who was just about to start working for one of the legendary traders discussed at the beginning of the book.

also sat here facepalming at some of the posters showing their class in this thread thinking vanity fair is like cosmo or something. i cant really think of a better gig for a writer tbf.

stephentbb2000

what a stomach full, makes me mad to think how unregulated we were. What were the banks, government and regulators thinking?

sollar

This section of the article is particuarly sobering.

There’s a big difference between depositors and bondholders: depositors can flee. The immediate danger to the banks was that savers who had put money into them would take their money out, and the banks would be without funds. The investors who owned the roughly 80 billion euros of Irish bank bonds, on the other hand, were stuck. They couldn’t take their money out of the bank. And their 80 billion euros very nearly exactly covered the eventual losses inside the Irish banks. These private bondholders didn’t have any right to be made whole by the Irish government. The bondholders didn’t even expect to be made whole by the Irish government. Not long ago I spoke with a former senior Merrill Lynch bond trader who, on September 29, 2008, owned a pile of bonds in one of the Irish banks. He’d already tried to sell them back to the bank for 50 cents on the dollar—that is, he’d offered to take a huge loss, just to get out of them. On the morning of September 30 he awakened to find his bonds worth 100 cents on the dollar. The Irish government had guaranteed them! He couldn’t believe his luck. Across the financial markets this episode repeated itself. People who had made a private bet that went bad, and didn’t expect to be repaid in full, were handed their money back—from the Irish taxpayer."

Krustacean

Sorry if this is old news ... but it annoyed the hell out of me.
Saw this video re ML analyst who got fired for reporting the reckless lending policies of the Irish banks.

http://www.businessinsider.com/michael-lewis-merrill-lynch-fired-analyst-who-predicted-irish-bank-crisis-after-banks-clients-went-ballistic-2011-2#ixzz1CunxmIx5

Earthhorse

My God. I just read Lewi's piece on Greece there. It actually makes me feel relieved to be Irish.

Liam Byrne

Permabear wrote: »

This post had been deleted.

Unlike those who like to falsely claim that everyone is to blame, etc, I can only speak from my own personal experience.

later12

I think I've already responded to this article isn't this a repeat of another thread?

Sand wrote: »

Interesting points for Later10 who has a major issue with Morgan Kelly not breaking down the door to Berties office in 2003:

Interesting? Which part, exactly, was interesting? I think he is very dashing with that erudite beard of his but I don't, if I must be honest, care for a personal insight into Morgan kelly's daily life and works, perhaps some of his more acquiescing fanbase might have found that interesting, sorry.

Why on earth is this man in an academic backwater in UCD's arts block. Where, with his crystal ball, are his millions?

He should be running the universe! Or at least our own little universe.

Travel is good

Absolutely excellent article. I did have a subscription (pre-recession days) to Vanity Fair & it always had a high standard. It's particularly good in explaining the whole economic/financial crisis all over the world, well worth buying.

I too, particularly thought the paragraph on Brian Cowen was so apt.

I know we've nearly all read the article by now/e-mailed it to everyone, but I still figure there will be a run on hard copies when it hits the shops.

Sobering lessons for us all indeed.

bleg

His summing up of lenihan is spot on. I can imagine lenny reeling off his usual bs, at least this guy wasn't fooled.

Hootanany

Got board with it after 2 pages read it all before

Sand

Interesting? Which part, exactly, was interesting? I think he is very dashing with that erudite beard of his but I don't, if I must be honest, care for a personal insight into Morgan kelly's daily life and works, perhaps some of his more acquiescing fanbase might have found that interesting, sorry.

Why on earth is this man in an academic backwater in UCD's arts block. Where, with his crystal ball, are his millions?

He should be running the universe! Or at least our own little universe.

Woaaaaah, dial it down a notch - Im sorry. Its just I actually dont know Morgan Kelly, have never met him, never attended any of his classes and I dont know anything of what he lectured on as I didnt attend UCD.

So when you started that huge thread to discover why Morgan Kelly wasnt shouting out about the banking crisis before 2006, I could only speculate that as an academic economist he would not even have been interested in the banks and would have assumed like everyone else that the FR and CB were doing their jobs, as well as the banks own risk management. I thought youd have been interested in learning that this was the case: that before 2006, he was working on medieval population studies.

Its interesting that you seem to really have a personal dislike of Morgan Kelly, that youve implied youre familiar with Irish banking culture with regards to Anglo-Irish being seen as a stern and tough lender :rolleyes: ( I cant speak for Irish banking culture myself - only banking culture) and you complained previously Morgan Kellys classes being boring and uninteresting. If they were on medieval population studies, I can only sympathise.

it was perhaps in Morgan Kelly’s nature to assume that, if his former students were cast on Irish TV as financial experts, something was amiss. “I just started Googling things,” he says.

Ouch.

Liam Byrne

bleg wrote: »

His summing up of lenihan is spot on. I can imagine lenny reeling off his usual bs, at least this guy wasn't fooled.

It doesn't take much to see through Lenihan's bs.......it's pretty obvious every time he opens his mouth, contradicting either something he's previously said or else the facts.

How anyone rates him as a minister is beyond me.

mikemac

Just read it there, excellent article

Have read a few of his books, Moneyball was the first one
Though that's on baseball, not finance

later12

Sand wrote: »

So when you started that huge thread to discover why Morgan Kelly wasnt shouting out about the banking crisis before 2006, I could only speculate that as an academic economist he would not even have been interested in the banks and would have assumed like everyone else that the FR and CB were doing their jobs, as well as the banks own risk management. I thought youd have been interested in learning that this was the case: that before 2006, he was working on medieval population studies.

That thread wasn't about Morgan Kelly, it was about the failure of Irish academic economists and financial experts generally to predict the imminent fallout within the margins of a widely acknowledged economic bubble generally - specifically a failure to predict a banking crisis. The only reason MK was mentioned in that thread, I recall, was because he, along with the ginger haired standup, is often cited as a prophet (that word specifically) of the Irish economic crisis; it is important to recognise, in accepting his or their current predictions, that he, and they, did not predict a banking collapse. Whether that was because he wasn't interested in the economy, or because he wasn't a party to the relevant information, or because he was busy studying mediaeval societies, is quite irrelevant. The simple point is that the people whose advice is now taken as sacrosanct did not predict the current crisis, it's a simple, basic enough point. It hardly warranted the discourse that resulted from the last thread, and I don't think it warrants a spillover into this one.

Its interesting that you seem to really have a personal dislike of Morgan Kelly,

I really don't, I think he hits the nail on the head a great more many times than he does not.

However he holds certain opinions that are simply irreconcilable with the facts as we have them, and I think he sometimes jumps to surprising conclusions without backing up his reasoning and writes, like David McWilliams, with the sensationalist aim of rousing a response or gaining notoriety as opposed to writing logically and analytically on such a contentious and sensitive issue whereby, unless handled carefully, is likely to inspire unnecessary panic or misinformation and cause his 'prophecy' to become self fulfilling. The public seem to place a certain amount of trust in academic economists, and that should not be abused for the sake of public prominence. It is all very well advocating an Irish sovereign default when you aren't the one who has to execute it. If you're right, you're a prophet, if you're wrong, so what, you're just forgotten either way.

GCU Flexible Demeanour

GSF wrote: »

The pain hasnt really started yet as we are only starting to close the structural deficit. Give it a year or two.

I agree. This kind of thing needs to be said a bit more often. Not in a defeatist sense, but we do need to be realistic. This is not the bottom, and quite substantial changes will happen to Irish society in the course of the next two years.

But I doubt reality will be allowed to surface at all this side of the election. Even after it, there may be a period of denial before we just do what's necessary.

gigino

glasso wrote: »

great article. gives a good indication of how we are perceived abroad. Lewis is slightly sensationalist but generally spot on.

particularly accurate with his depiction of Cowen -

" Cowen happens also to have been the minister of finance from 2004 until mid-2008, when most of the bad stuff happened. He is not an obvious Leader of Men. His movements are sullen and lumbering, his face numbed by corpulence, his natural resting expression a look of confusion. One morning a few weeks before, he went on national radio sounding, to well-trained Irish ears, drunk. To my less trained ones he sounded merely groggy, but the public is in no mood to cut him a break. (Four different Irish people told me, on great authority, that Cowen had faxed Ireland’s 440-billion-euro bank guarantee into the European Central Bank from a pub.) And the truth is, if you were to design a human being to maximize the likelihood that people would assume he drank too much, you’d have a hard time doing better than the Irish prime minister. Lenihan, who follows on Cowen’s bovine heels, comes across, by comparison, as a decathlete in peak condition."

+1. Overall a great article. So much more could be said about how the country was run though.

gizmo555

Sand wrote: »

So when you started that huge thread to discover why Morgan Kelly wasnt shouting out about the banking crisis before 2006, I could only speculate that as an academic economist he would not even have been interested in the banks and would have assumed like everyone else that the FR and CB were doing their jobs, as well as the banks own risk management. I thought youd have been interested in learning that this was the case: that before 2006, he was working on medieval population studies.

I think you've nailed it there. This, to me, is the pivotal point of Lewis's entire article:

Kelly’s colleagues in the University College economics department watched his transformation from serious academic to amusing crackpot to disturbingly prescient guru with interest. One was Colm McCarthy, who, in the Irish recession of the late 1980s, had played a high-profile role in slashing government spending, and so had experienced the intersection of finance and public opinion. In McCarthy’s view, the dominant narrative inside the head of the average Irish citizen—and his receptiveness to the story Kelly was telling—changed at roughly 10 o’clock in the evening on October 2, 2008. On that night, Ireland’s financial regulator, a lifelong Central Bank bureaucrat in his 60s named Patrick Neary, came live on national television to be interviewed. The interviewer sounded as if he had just finished reading the collected works of Morgan Kelly. Neary, for his part, looked as if he had been dragged from a hole into which he badly wanted to return. He wore an insecure little mustache, stammered rote answers to questions he had not been asked, and ignored the ones he had been asked.

A banking system is an act of faith: it survives only for as long as people believe it will. Two weeks earlier the collapse of Lehman Brothers had cast doubt on banks everywhere. Ireland’s banks had not been managed to withstand doubt; they had been managed to exploit blind faith. Now the Irish people finally caught a glimpse of the guy meant to be safeguarding them: the crazy uncle had been sprung from the family cellar. Here he was, on their televisions, insisting that the Irish banks were “resilient” and “more than adequately capitalized” … when everyone in Ireland could see, in the vacant skyscrapers and empty housing developments around them, evidence of bank loans that were not merely bad but insane. “What happened was that everyone in Ireland had the idea that somewhere in Ireland there was a little wise old man who was in charge of the money, and this was the first time they’d ever seen this little man,” says McCarthy. “And then they saw him and said, Who the f**k was that??? Is that the f**king guy who is in charge of the money??? That’s when everyone panicked.”

gigino

And the sickening thing was there are so many people like him in the public service ( government, regulators office, central bank ), who were supposed to run the country properly....who made a mess of things but who are still on a huge government salary or pension, as the case may be.

The interesting thing and one of the few new things in the vanity fair article is the picture painted of Biffo faxing the surrender note ( call it what you will ) to the IMF / EU from a PUB.

When I think of all the private sector people - inc some of my relations - who worked long hours ( not from a pub or Galway hotel ) in their work / businesses, some of who have lost their jobs, and the more successful of whom have seen their earnings as well as hard earned "pension fund" ( bank shares and property etc ) decimated...
They are very, very angry and understandably so.

zig

finally read the whole thing,
Most of what hes saying is completely true, and probably educational for anyone thats not Irish, nothing new for us though (obviously).
That said I never thought id agree with Lenihan but I have to say I think hes right when he says its just a 'light piece'. Theres only so many ways you can describe a ghost estate as some sort of result of a war torn famine inflicted country before it gets boring.
Also, articles lose credibility when they lie, and I dont know what hes talking about regarding politicians saying everything twice in the dail, once in Irish ,once in English.

Also he imples that Lehinans cancer is some sort of reason he gets off the hook, no its not. He gets off the hook because he presents him a little better than Cowen or Bertie, not to mention the fact that he is not Taoiseach.

gigino

zig wrote: »

Also, articles lose credibility when they lie, and I dont know what hes talking about regarding politicians saying everything twice in the dail, once in Irish ,once in English.

I think he was talking about the one day he ws in the Dail, and I guess some things were said in both languages ? Remember one day in the Dail ( I think it could have been during the week of the IMF being called in ) there was a big Dail debate on the Irish language instead. Suppose some of the speakers had used / bragged a lot in Irish that day ? Suppose you were a foreign visitor to the Dail that day ? I am only guessing / speculating on this point.