Two years ago, the Minister for Finance Brian Lenihan told us that the bank guarantee – concocted in mysterious circumstances in the dead of a September night – would have no effect on the wider economy. It has destroyed it. He said the bailout was the cheapest in the world. It turned out to be the second most expensive after Iceland's and may yet end up being the dearest. He told us that the cost of bailing out Anglo Irish Bank would be zero. Then he told us it would be €1.5bn. That guess soon rose to €4bn but was sadly wide of the mark, And so, last March, Lenihan told us the total cost would be €12.5bn with another €10bn to come. Wrong again. On Thursday, he admitted the cost would be €29bn but, hey, who the hell knows, it could be €34bn. Some people are suggesting that it might go higher than this.
Two years ago, the minister told us that the banking problem was merely one of liquidity. It turned out to be one of solvency. Last year, in his budget speech, he told us we had turned the corner. Between April and June, the economy shrank. Last November, he told us the government deficit would be 12% of GDP. On Thursday, the Central Bank said it would be 32%.
Brian Lenihan is shaping up nicely to be the worst minister for finance in recent history. After more than two years, the mess we see all around us is his mess, the despair his despair. His supporters can no longer point to the misdeeds of criminal bankers or buffoons like Charlie McCreevy and Bertie Ahern and suggest Lenihan is doing a manful job of cleaning up after them. Instead it is becoming clear that he inherited a bad situation and made it worse. The many predictions he got wrong were not the product of dishonesty but the confused contributions of somebody who didn't know what he was doing, and who was in thrall to advisers, commentators and officials who didn't know what they were doing either.
The issue of Lenihan's inexperience inevitably arises. Indeed, he inadvertently drew attention to it in a speech last weekend to a conference on positivity in the media. "Surely there have to be limits to the experience of some of our leading columnists," he said on that occasion. "Not everyone can write authoritatively on our current crisis… perhaps some of our columnists might question the value they can add to the debate."
Lenihan, of course, was appointed to the Department of Finance at the worst time in our economic history after just 11 months in cabinet – at the Department of Justice. He was as unqualified for the job as it's possible to be but apparently did not question the value of his own contribution to the debate. The result has been a man so unsure of himself that he has been bamboozled by bankers, too ready to take the advice of senior civil servants who couldn't predict what day it is tomorrow, and overly impressed by ideologues like Colm McCarthy. (People ask what Labour would do differently if they were in power; one change, I'd suggest, will be an end to the sight of McCarthy hanging around the place like some right-wing Yosser Hughes picking up little jobs from the Department of Finance).
The calls for even more severe cuts continue, although if one of the definitions of madness is doing the same thing over and over again expecting a different result the next time, then it can fairly be said that the austerity junkies, Lenihan included, have gone stark, raving bonkers. The government was warned a year ago that a policy of cutbacks which wasn't tempered by some kind of stimulus would lead to stagnation and further recession. The unconscionably high unemployment and emigration rates, and the shrinkage in the economy in the second quarter of the year, prove that those warnings and the people who made them (including at least two columnists) were right. But Lenihan doesn't do listening, or at least he doesn't listen to people outside the comfort zone he has created around himself.
The economy is crying out for an injection of demand. The unemployed can't provide it because they have no money. Private-sector workers with spare cash are so frightened of the prospect of unemployment that they are saving, not spending. Public-sector workers mostly have job security but have suffered so many pay cuts and levies over the past two years that they can't afford to spend either. The minister proposes to continue, worsen even, this situation.
The only place the demand can come from is government, and the only place the government can get the money currently (bar taxing some of the wealth which still exists in the country) is from the National Pension Reserve Fund. So far, Lenihan has been happy to raid the fund to help the banks, but has shown no such enthusiasm when it comes to helping out the unemployed. His continued refusal to look at this option has become perverse, but not surprising. Because if there was never a coherent Plan A, how can we expect a Plan B?
Good vibrations at leinster house gave us a buzz
With all the doom and gloom around last week, it was hard to find a reason to laugh, so kudos to performance artist madamk for lightening the mood outside Leinster House on Wednesday. After Joe McNamara's cement lorry made very slight contact with the railings of what's sometimes called (ironically, I presume) the seat of power, kadamk, armed with little more than a hard neck, a sex toy, and a video camera arrived on Kildare Street to interview TDs and senators about this outrageous attack on their integrity.
Fine Gael's Brian Hayes – the next Taoiseach, some people tell me – was annoyingly pompous about it all, but it was only when madamk got Noel O'Flynn and Charlie O'Connor to talk to her that she hit paydirt. O'Flynn and O'Connor proceeded to spout the usual Fianna Fáil nonsense about the state of the world even when the impressively-sized sex toy was produced to masquerade as a microphone.
The sight of the two of them – a lobotomised Podge and Rodge – continuing with their platitudes while the sex toy danced for joy in close proximity to their mouths was one of the week's few pleasures. You can see it for yourself on YouTube. Just search for madamk.