Was anyone ever held accountable in Ireland for the 2008 crisis?

Mr. teddywinkles

Eugene Norman wrote: »

There was nowhere near enough cash to buy all those houses. If restricted to cash buyers the market would have been stalled long before peak.

Hypothetical scenario mate. Your obviously missing my point.

Mr. teddywinkles

El_Duderino 09 wrote: »

I'm saying the second one. The people share the blame because they accepted loans that relied on their income staying extraordinary high for the term of the loan. They bet on the boom lasting. That's really silly but I don't think people accept their mistake and some people can't wait to make the same mistake again

See its easy say its silly in retrospect.

micosoft

Eugene Norman wrote: »

I don't buy this blaming of the little people. The point of representative democracy is to elect politicians (not experts) who should listen to experts. Ireland didn't have high borrowing costs during the boom, private debt was increasing enormously but no economist said much about that. The banks loaned crazy money. The regulators didn't regulate. The ECB kept interest rates too low.

The point of representative democracy is to elect politicians to represent you. End of. You can't just redefine terms to create an alternative narrative. "Little People" make big changes collectively by choosing a Government to represent them. The fundamental point of Democracy.

What I really don't buy is the claim that the electorate bear no responsibility for the people they vote in. The electorate should be held accountable for their actions. If they elect politicians who promote good governance they will get a well governed state. If they elect politicians based on wild promises... well. All you have done is list a series of facts which beg the question "why?" or "was that on it's own sufficient factor?". The common thread for why we suffered more than most was the Government we elected in three times in a row because they bought off sections of the electorate.

Until the electorate understand the cause and effect we will continue to go through boom and bust. We are doing it right now. My belief is that one of the most corrupt acts a citizen can commit is to give your vote in return for "promises" from your TD.

mahoganygas

Eugene Norman wrote: »

I don't buy this blaming of the little people. The point of representative democracy is to elect politicians (not experts) who should listen to experts. Ireland didn't have high borrowing costs during the boom, private debt was increasing enormously but no economist said much about that. The banks loaned crazy money. The regulators didn't regulate. The ECB kept interest rates too low.

Ireland wasn't the only bankrupt country with an elected government.

Who elected those governments?

It's too easy to simply blame politicians. Society, including politicians and the little people who elected them were to blame.

I was part of that society during the boom. I borrowed, I spent, I didn't save and I helped elect those governments. I was wrong. I suffered the consequences.

Why is it so difficult for Irish people to admit this and accept blame?

Wanderer78

One of the main causes of the economic collapse is a fundamentally flawed banking and monetary system, and sadly little has changed with these systems. So future collapses are inevitable. Yes the general public had a part to play in the collapse but we need to accept there's something seriously wrong with these systems before we can change anything to prevent future collapses.

micosoft

armabelle wrote: »

but maybe their money is in Panama?

The truth is very few of them had money. Most of them had massive debt and lived an extravagant lifestyle based on borrowings. Panama is where old money goes or fraudulent money from various kleptocracies. For the most part Developers borrowed money because they could to build housing we were happy to buy. When the music stopped that stopped and they went bankrupt.

Ironically what Panama has shown is that Ireland has actually one of the counties with less money squirreled away then countries perceived as being "less corrupt" then Ireland. The couple of Irish cases dated back to events in the mid nineties.

Again - I reiterate. The cause of the crash was the difference between state expenditure on social welfare, health etc and state income based on unsustainable property taxes.
Banking crisis was a one time cost of 60billion which will actually end up costing us about 40 Billion.
The deficit on public spending from 2008 is every year. At one point the difference between public spending and revenue was nearly 20billion in a single year. That is the fundamental issue. In fact you could say the state is merely paying back taxes it took from borrowers back to the banks during the voodoo economics of the last Fianna Fail Government.

LiamoSail

How could we jail anyone for the consequence when there was no criminal act that caused the bulk of the problems in Ireland? It was incompetence on the part of our Government,.

The Irish public paid, and are still paying the price because as an electorate, we got what we deserved.

The recession was caused by external factors, however it's effect on us was made up both of internal and external factors.

We elected consecutive FF governments. We saw them narrow the tax base, increase spending dramatically, buying public service votes by making them amongst the best paid public servants in Europe, provide tax incentives to property developers encouraging the developers to continue investing while feeding the demand for property through Government policies and the facilitation of reckless lending by the banks. As spending was increased based on the tax revenues from construction and property, revenues that were always going to be unsustainable in the event of a slowdown, we elected them again, Government spending having been increased in the region of 25% (iirc) in the run up to the 2008 election. Just as a Fianna Fáil TD is easily bought, so too were the electorate.

When the recession hit and the construction and property tax revenues dried up, the Governments spending was entirely unsustainable. Then the banks neared the brink and we were ****ed.

Fianna Fáil had run the economy with all the forward thinking of a drunk after a good win in the bookies. But that's just Fianna Fáil being Fianna Fáil. They were certainly at fault but not criminally liable for the consequences. The bank debt was then forced upon us by the ECB, and while I believe unfairly so, there's no criminal liability there.

Prosecutions against Seanie Fitz and David Drumm are just a sideshow, they didn't cause the recession, and had they not hid the loans they're accused of hiding, we'd still be in the same situation we are now. Obviously had they been more responsible in their business practices, the burden they imposed on the state would be significantly less, but that's not the aspect of their conduct that's facing trial.

The magnitude of the effect of the downturn that was felt in Ireland was as a result of our Government and regulators taking their eyes off the ball. By the time they realised what was happening, it was too late. They were incompetent, but not criminally liable.

It's the tax payer paying the price for the electorate electing and re-electing an incompetent Government. It wasn't corruption or criminal acts that caused us to end up in the state we did, it was us electing an incompetent Government.

And there's still people who will vote again for these same clowns

micosoft

Wanderer78 wrote: »

One of the main causes of the economic collapse is a fundamentally flawed banking and monetary system, and sadly little has changed with these systems. So future collapses are inevitable. Yes the general public had a part to play in the collapse but we need to accept there's something seriously wrong with these systems before we can change anything to prevent future collapses.

And with this fundamentally flawed banking and monetary system we could still buy Cappuccino's in Coffee shops at the height of the crisis. We are on track to balance our budget by 2017 and our economy is getting close to full employment with shortages. Remarkable for a "flawed system".

I suspect that the problem with your hypothesis is that you believe there is a perfect system out there. The reality is they have all been tried and found to be disastrous because of two reasons:
1. All systems are run by people who are flawed by nature.
2. The alternatives I suspect you support aren't flawless - they depend on hiding the flaws until of course, it's too late. And that system collapses completely. The reason the current system has worked for centuries is that those flaws are exposed reasonably quickly. This appears on the short term to be harsher but in the medium and long term (and usually) it is always better. Ask any Russian who lived under the fall of "perfect" communism (not suggesting you are communist, simply this is one of the perfect alternatives at that time).

I have no doubt that we will have another recession for a different reason at some point in the future even in a well run economy. I accept that because the world is infinitely more complex then any "system" you could propose would handle all eventualities and the human element.

And let's be clear - our economy was spectacularly mismanaged from 2004-2008. By a flawed electorate voting in a flawed government.

Wanderer78

micosoft wrote:

And with this fundamentally flawed banking and monetary system we could still buy Cappuccino's in Coffee shops at the height of the crisis. We are on track to balance our budget by 2017 and our economy is getting close to full employment with shortages. Remarkable for a "flawed system".

Hmmm it's working for our housing and health systems isn't it? We 're in desperate need of alternatives such as public banking. Our current system just isn't working. Our current systems are polarizing our societies. I can see many are gonna be left behind and our social safety nets are being decimated

micosoft

kbannon wrote: »

Neary was chosen but I don't believe that it was so that he would allow dodgy deals to go on but that he would be a light touch regulator.
As the public wanted continued easy access to credit and the politicians wanted a happy electorate, this meant that a light touch regulator was needed.

I wouldn't just blame the PDs for it. It was all of the parties to be fair. Everyone wanted to feel rich and the parties weren't going to get in their way.

Agreed. He was put in for "light touch". Many politicians were culpable. However the PD's big agenda was promoting light touch regulation in the early naughties which led to a boom in financial services and the IFSC at the time. Specifically McCreevy reined in the regulation of banks at the time - while he remained in FF he was very close to the PD line on this.

El_Duderino 09

Mr. teddywinkles wrote:

See its easy say its silly in retrospect.

I agree. I don't say it to persecute those who gambled and lost. I say it because now is the time to remind people that next time there's a boom, plan for the bust.

That goes for voting for government who is proposing investment in the future rather than voting for pay increases and tax cuts

Wanderer78

i think this discussion somewhat fits into this thread:

micosoft

Wanderer78 wrote: »

Hmmm it's working for our housing and health systems isn't it? We 're in desperate need of alternatives such as public banking. Our current system just isn't working. Our current systems are polarizing our societies. I can see many are gonna be left behind and our social safety nets are being decimated

No, we aren't. You are grossly exaggerating. Our current system is working for the most part. It's fairly inevitable that there would be a house builiding contraction from a property crash that bankrupted our builders and property developers. It takes a year to pull together design and funding, a year to get planning permission and about three years to complete the sort of significant developments (500+ units) that we need to solve the housing shortage. Working backwards we would have needed to be starting these projects in 2009/2010. Tell me now, who in their right mind would have had the foresight, money and balls to promote such a project out of the blue? The state was bust so could not fund it itself. All the banks (if you haven't noticed) were (and mostly are) in Public ownership.

Your expectations are unrealistic and your solution (different system) does not solve the problem. Public owned banking is not a panacea. Look at Freddie Mae and Freddie Mac in the US which were state owned responses to exactly the problem we have. Both went seriously bust in 2008.

There are issues with where the country is now (fairly obviously given the economic crash we had) but the root cause goes back to us spending more on social welfare, redistribution of income etc then our income. We need to repair that through better long term governance. Not imaging that there is some system that will "magic" up the shortfall in revenue.

Wanderer78

micosoft wrote: »

No, we aren't. You are grossly exaggerating. Our current system is working for the most part. It's fairly inevitable that there would be a house builiding contraction from a property crash that bankrupted our builders and property developers. It takes a year to pull together design and funding, a year to get planning permission and about three years to complete the sort of significant developments (500+ units) that we need to solve the housing shortage. Working backwards we would have needed to be starting these projects in 2009/2010. Tell me now, who in their right mind would have had the foresight, money and balls to promote such a project out of the blue? The state was bust so could not fund it itself. All the banks (if you haven't noticed) were (and mostly are) in Public ownership.

Your expectations are unrealistic and your solution (different system) does not solve the problem. Public owned banking is not a panacea. Look at Freddie Mae and Freddie Mac in the US which were state owned responses to exactly the problem we have. Both went seriously bust in 2008.

There are issues with where the country is now (fairly obviously given the economic crash we had) but the root cause goes back to us spending more on social welfare, redistribution of income etc then our income. We need to repair that through better long term governance. Not imaging that there is some system that will "magic" up the shortfall in revenue.

id highly recommend the work of american economist ellen brown in regards the workings of public banking. busy now, so i ll have to get back to you later. id also recommend the work of bill black and michael hudson

Eugene Norman

Mr. teddywinkles wrote: »

Hypothetical scenario mate. Your obviously missing my point.

You had no point. Lending was caused by the banks lack of due diligence.

RainyDay

armabelle wrote: »

I am not Irish so don't know much about the crisis here in 2008. I did read that Ireland was one of the worse off countries as a result of the crisis. I was just wondering if anyone was actually persecuted or held accountable for the loss to the economy after the crisis?

How about the voters who voted for Fianna Fail in 2007, knowing well that they were a shower of cowboys in bed with the construction industry? Can we hold those voters accountable for the actions?

Godge

Eugene Norman wrote: »

Well I said "little people". It would be great if we elected smart politicians.

The point is we did. We elected Joan Burton and Richard Bruton who repeatedly warned the FF government that they were going the wrong way about raising revenue. Problem is we didn't vote for their parties in large enough numbers.

The bigger problem is that when we did vote for their parties and they did sensible things like water charges, LPT, prescription charges etc. we turfed them out at the next election and went back to populism.

You could get away with that argument if the electorate hadn't bought the lies of FF, SF and AAA/PBP in the most recent election. I really thought we had learned our lesson from the crash, I was wrong.

Mr. teddywinkles

El_Duderino 09 wrote: »

I agree. I don't say it to persecute those who gambled and lost. I say it because now is the time to remind people that next time there's a boom, plan for the bust.

That goes for voting for government who is proposing investment in the future rather than voting for pay increases and tax cuts

Totally agree. Dont agree with all this talk of payrises and taxcuts just because theres a little more tax intake. Things are inproving but not to a point where its party time.

Mr. teddywinkles

Eugene Norman wrote: »

You had no point. Lending was caused by the banks lack of due diligence.

My point was a lot of ordinary people were caught up in it and didn't care what they paid as long as they had property. People in varies sectors and professions. And the cop out is to blame banks developers and auctioneers instead of looking at themselves. I was in my mid twenties at the time having people tell me to buy. Thank fook i didnt. My own mates included and now for years on have to listen to them bitch about it. People should take responsibility for their own finances.

Seth Brundle

Mr. teddywinkles wrote: »

My point was a lot of ordinary people were caught up in it and didn't care what they paid as long as they had property. People in varies sectors and professions. And the cop out is to blame banks developers and auctioneers instead of looking at themselves. I was in my mid twenties at the time having people tell me to buy. Thank fook i didnt. My own mates included and now for years on have to listen to them bitch about it. People should take responsibility for their own finances.

The problem is that they can't take responsibility for their finances. Not too long ago, the central bank tried to bring in lending restrictions, with the aim of curbing price rises. They were obstructed by both the public and politicians alike, so the restrictions got watered down.
There is still criticism of these rules which have to a certain extent stifled the housing demand (I found this out last year when selling)

Have we learnt anything?
Obviously some of us haven't!

micosoft

RainyDay wrote: »

How about the voters who voted for Fianna Fail in 2007, knowing well that they were a shower of cowboys in bed with the construction industry? Can we hold those voters accountable for the actions?

Let's just hold the voters in the very recent election accountable. Why did you vote for politicians who appealed for the lowest common denominator. Why did you just vote for a convicted corrupt politician. Making a mistake once is pretty poor. Repeating that mistake 5 years on is inexcusable.

And I'd like to point out. Fianna Fail is a creation of the Irish Electorate. The problem here is that Fianna Fail actually does represent a democratic manifestation of a certain type of ideology in this country where a state is only valuable as a source of favours. If FF didn't exist the electorate would create one. It's a mistake to think FF is a standalone inherently corrupt entity that voters misguidedly vote for. It is actually the democratic manifestation of their will. That's the kernel of what I'm trying to get at. Until the electorate starts engaging at an adult level with politics and realize there is a cost to everything we will not develop responsible governance in this country.

Godge

micosoft wrote: »

Let's just hold the voters in the very recent election accountable. Why did you vote for politicians who appealed for the lowest common denominator. Why did you just vote for a convicted corrupt politician. Making a mistake once is pretty poor. Repeating that mistake 5 years on is inexcusable.

And I'd like to point out. Fianna Fail is a creation of the Irish Electorate. The problem here is that Fianna Fail actually does represent a democratic manifestation of a certain type of ideology in this country where a state is only valuable as a source of favours. If FF didn't exist the electorate would create one. It's a mistake to think FF is a standalone inherently corrupt entity that voters misguidedly vote for. It is actually the democratic manifestation of their will. That's the kernel of what I'm trying to get at. Until the electorate starts engaging at an adult level with politics and realize there is a cost to everything we will not develop responsible governance in this country.

If you combine the seats of FF, SF and AAA/PBP, you get 73, add in a few FF-gene independents, you could argue that the majority of the electorate still favour parties which promise lots of goodies that you don't have to pay for.

micosoft

Godge wrote: »

If you combine the seats of FF, SF and AAA/PBP, you get 73, add in a few FF-gene independents, you could argue that the majority of the electorate still favour parties which promise lots of goodies that you don't have to pay for.

And therein lies the root cause.

El_Duderino 09

Mr. teddywinkles wrote:

Totally agree. Dont agree with all this talk of payrises and taxcuts just because theres a little more tax intake. Things are inproving but not to a point where its party time.

Even when it's party time, it's not party time. Seven fat cows and seven skinny cows...

In history if you allow yourself to be as weak as we were post 2008, you would be invaded and slaughtered. Now you can just be taken over by the IMF. The IMF route is preferable, but it's not great.

If we give ourselves the pay rises and the tax cuts, then we're accepting a biting recession as part of our future.

fly_agaric

micosoft wrote: »

It's fairly inevitable that there would be a house builiding contraction from a property crash that bankrupted our builders and property developers. It takes a year to pull together design and funding, a year to get planning permission and about three years to complete the sort of significant developments (500+ units) that we need to solve the housing shortage. Working backwards we would have needed to be starting these projects in 2009/2010. Tell me now, who in their right mind would have had the foresight, money and balls to promote such a project out of the blue? The state was bust so could not fund it itself. All the banks (if you haven't noticed) were (and mostly are) in Public ownership.

It was obvious from demographics that there was going to be a bad shortfall in urban areas; where the jobs are + where people want to live.
The private sector could build for reasons you cite, but state could have done it if the will had been there.

However, it is axiomatic to FF/FG/Labour that housing should all be provided almost entirely by private sector in modern Ireland. Councils or any arm of govt. stepping in is a very bad thing, like communism or something. The states' levers should be strictly limited to giving handouts to landlords, or tax breaks to developers, or watering down building regs so developer can have more profit etc. to get them building.

Additionally, fixing bank's balance sheets and NAMA were the top priority and both are linked into housing provision unfortunately. A constriction of supply of housing clearly increases rents/yields & increases value. The negative consequences are not directly measured.

BoJack Horseman

fly_agaric wrote: »

but state could have done it if the will had been there

Very true... and there wasn't.
The governments budget fixing plan was as much as Liberty Hall would allow.

Capital expenditure took the largest hit of any kind of spending contraction, collapsing by 60% from peak..... and it has barely regained ground (as of year end 2016 it will be 57% below the 2008 peak).

Capital expenditure in 2016 will be the same as it was in 2000.

The government did what they could & fixing the deficit was always the right thing to do, contrary to the oppositions bleating.... but they lacked the balls to prioritise adjustments elswehere & hammered the capital budget.
The cost for this is being reaped now.

Carlos Orange

mahoganygas wrote: »

But by far the largest factors which affected the Irish economy were as a result of foreign influences.
A lot of blame is placed at the sub-prime mortgage fiasco in US banks. This is seen as the catalyst that started the downfall of the global economy.

I don't really buy that. The Irish boom was bound to go bust at some stage whatever happened in the US. When it happened it was exacerbated by the Germans having an export driven economy where they sold stuff to other EU countries who paid for it using money German banks lent them.

fly_agaric

armabelle wrote: »

I am not Irish so don't know much about the crisis here in 2008. I did read that Ireland was one of the worse off countries as a result of the crisis. I was just wondering if anyone was actually persecuted or held accountable for the loss to the economy after the crisis?

On topic, not really. Cases are ongoing, pushing towards 10 years later.
I also find it all hard to wrap my head around.
It seems to be very hard to actually convict someone of white collar "crime" (if one can call it that) in Ireland.
I don't know if is it because some things that led up to the crisis that a layperson like me would definitely feel are morally "bad" are not crimes in Ireland, or the proof needed is very high.

Will dump these links about Ireland...sorry Iceland here

http://www.ft.com/cms/s/0/76ff5a36-525e-11e2-aff0-00144feab49a.html#axzz45pO7v26Y

http://www.independent.ie/business/world/icelandic-bankers-jailed-for-reckless-loans-made-before-crash-28952296.html


Larus Welding, the former chief executive officer of failed Icelandic bank Glitnir, and Gudmundur Hjaltason, a former director at the bank, have each been sentenced to nine months in jail for fraud, a court ruled.
They were sentenced by the Reykjavik District Court after the two men were indicted a year ago on charges that they had "misused their position and grossly endangered the bank's funds" by lending €102m to a company called Milestone ehf without guarantees or collateral, the prosecutor said. At the time Milestone was a shareholder in the bank.

hmmm

fly_agaric wrote: »

It seems to be very hard to actually convict someone of white collar "crime"
[/I]

Incompetence is not a crime.

There is a lot of casting around trying to find a single person we can blame for everything, and we haven't found that person after multiple inquiries because they don't exist. We've found a lot of incompetence, and an incompetent electorate, but we can't jail people for that.

Just look at the people giving out about the Central Bank putting limits on mortgages - bloody hell, one of the few lessons we should have learned is that handing out ever larger loans is going to lead to disaster and we haven't. We're like kids demanding access to an unlimited supply of chocolate.

micosoft

psinno wrote: »

I don't really buy that. The Irish boom was bound to go bust at some stage whatever happened in the US. When it happened it was exacerbated by the Germans having an export driven economy where they sold stuff to other EU countries who paid for it using money German banks lent them.

Yes yes. Blame the Germans for having a real economy which involved making things other people wanted rather then selling property to each other. This is getting tiresome. The Irish electorate alone are responsible for their greed and corruptly voting for FF three times in a row to give away money at the expense of future generations. And the actual facts are that the Germans did not loan us that money. It was typically ourselves followed by the the British.