Ahern, Lenihan disagree on causes of crash

Former taoiseach blames global issues, while Lenihan looks to Irish construction industry

Conor McMorrow, Political Correspondent

Different view: Ahern and Lenihan fundamentally disagree on cause of Ireland's economic crisis

Jim Power: 'biggest collapse'

Minister for Finance Brian Lenihan and former taoiseach Bertie Ahern will disagree fundamentally on the causes of Ireland's domestic economic crisis in the RTÉ documentary Freefall tomorrow night.

The second part of the programme will look at the way the economic bubble burst and charts the course taken by politicians, bankers, regulators and developers.

Explanations for Ireland having one of the hardest landings in the western world after the bubble burst show Ahern blaming external international circumstances.

Lenihan, who was not at the cabinet table when Ahern was taoiseach, admits: "We became too dependent on construction as the main motor and engine in the economy …"

But Ahern sticks to the line he has trotted out throughout the recession: "If Lehman's didn't collapse then we wouldn't have had the hard landing … and because of the international situation we didn't get that, which blew a bubble we otherwise probably could have got away with."

Economist Jim Power remarks in the programme that "for Ireland the collapse we have seen in the economy and financial system is the biggest collapse that has ever occurred in Irish history".

Much of the programme focuses on developers. Michael O'Flynn, managing director of the Flynn Group, says: "By and large developers are a hard working grounded group of people, who have generally built up their businesses from scratch. The nature of developers is to put their chips back on the table and keep going."

O'Flynn adds: "The banks were the fuel of the property economy, let's have no doubt about that – we never asked the question could the bank afford to give us the money. We all thought there were people in an ivory tower figuring out the bigger picture whilst we all got in with the game at hand."

Richard Barrett of Treasury Holdings provides a good insight into how property prices soared. He explains that even though land in Dublin 4 became the most expensive land on the planet, there were always people willing to bet on that price level rising further. He also points out that as well as reckless lenders fuelling the bubble, there were reckless borrowers that are just as culpable.

But Ahern is still reluctant to deride developers and says, "Maybe they weren't wise in some of their commercial decisions, but lots of other people weren't wise in their commercial decisions either and I don't go with the thing of just dancing on their graves."

September 12, 2010

Comments

#1 Tony commented, on September 12, 2010 at 8:02 p.m.:

It is human nature to blame the other fellow. But saying I am not to blame as I was only the head of the government (Ahern) or voted for its policies in the Dail (Lenihan) is not credible. Both are responsible in their different ways and should acknowledge as much.

#2 Robert Browne commented, on September 12, 2010 at 9:46 p.m.:

They must be the last to know because they want to be the last to know. There are none so dumb as those that want to remain dumb.

For the record, what caused the crash? It was the lack of leadership, total slieeveen idolatary of wealth, slavering subservience of government to banks and developers as demonstrated by no regulation whatsoever of the banking industry.

#3 jack meskill commented, on September 12, 2010 at 10:43 p.m.:

For goodness sake, people, wake up. Stop with repeating Ahearne's and Lenihans PR psychobabble.
IT WAS OUTRIGHT FRAUD on the part of almost all of our politicians, bankers and their business partners, the property speculators and financial gamblers, that killed the Celtic Tiger and the financial futures of our children.
No-one goes to jail. No-one changes their votes. No politician has to admit anything and the dirty tricks continue.
We have clearly, legally and morally abolished the crimes of fraud, stealing and grand-scale corruption, for all those lucky and obviously worthy citizens who managed to rip off at least ten to five thousand million a-piece. Seanny Fitz and company and their very wealthy families are going to live "Happily ever after", to be sure to be sure, sir !
For those earning less than 50K a year, it is still jail and penury as usual.

#4 Robbie commented, on September 12, 2010 at 10:45 p.m.:

Correct, Lenihan was not at the cabinet table making these decisions but I am fairly certain he didn't vote against any of the decisions taken by the cabinet and didn't speak out about them in the Dáil. Lenihan is a capable individual but he certainly has a level of guilt attached to him regarding the mess our country is in now. The people he cheerled on to destroy our country are of course B Ahern and Cowan; don't really see him criticising them yet. Also it must be remembered tha Lenihan is pursuing the current policies of attacking the most vulnerable in society through his economic policies while the wealthy get away virtually scott free, all the while he lies to us that we are all sharing the pain equally.

#5 joe commented, on September 13, 2010 at 1:46 a.m.:

Lehmans was in the business of wrapping up risky loans to make them appear less risky and distributing them. Without this folks earning E50K a year wouldn't be able to get E700K mortgage to buy a cardboard box - because that would be a risky loan.

#6 brendan Buffini commented, on September 13, 2010 at 10:37 a.m.:

That Gangster look in photo above speaks volumes!!!!

Whenever I see or listen to Bertie Ahern it reminds me of that Great Movie The Untouchables, loved the part in the Court room, where Al Capone's accountant is on the stand with a book of all the names who were on Capone's payrole, which finally done him for tax evasion. If their is ever a re-make of the movie Dublin would be an ideal location with a ready made cast of Actors in Leinster House.

#7 Brian MacFiaich commented, on September 13, 2010 at 6:53 p.m.:

How can a person, in concert with others, destroy the economy of this country, and not be guilty of an unlawful offence?
Persons have been sent to prison for failing to buy a €160 TV licence.
Where is the morality in all of this?

#8 Jim commented, on September 13, 2010 at 8:23 p.m.:

I see Jim Power has been busy reinventing himself over the last year,funny how one of the cheerleaders for the boom seems to have forgotten many of his own optimistic pronouncements from a few years past.

#9 Teddy O'Connor commented, on September 19, 2010 at 3:27 p.m.:

It seems that when the Celtic Tiger was in full swing,our leaders bragged of their achievements. Now the economy has languished, nobody is willing to assume responsibility.It is clear that our leaders have behaved with reckless incompetence and should be removed.The recent behaviour of Mr Cowen indicates the contempt he holds for the people of Ireland.