One of Roald Dahl's stories is about an emperor so cruel his tailors trick him into believing their invisible cloth will insulate him against the most extreme Arctic cold. The emperor dons the cloth for a spot of skiing, and freezes to death. Once upon a time, I read that story and thought, 'gullible fool'.

Nowadays, I read stories in the newspapers and think 'what sort of fools are we?' They are stories like Dahl's. They are about illusionary things that we convince ourselves are real. Things like politicians' promises. Things like corporate ethics and fiscal justice and the same law applying to everyone equally. Things like the apostasy of crony capitalism and political nepotism.

There is a reason why Ireland boasts a world-beating body count of Nobel laureate writers. It's because we dwell contentedly in our imaginations. Our leaders tell us that, though we cannot see the hairshirts they are wearing, theirs are the same as ours. And we think how fetching they look in them. Blind faith has never been as unshakeable as it is in post-Catholic, post-boom Ireland.

Eight days after the finance minister said unequivocally in his budget speech that TDs would no longer receive long service increments we learn that, actually, they're still getting them. In the same breath, he said the income levies would be doubled from 1 May. Now they're being back-dated to 1 January. In the white glare of enlightenment, nobody mentions the word "dishonest".

This is a strange omission in a time of consensus that public trust must be restored after remorseless revelations of deceit in the Golden Circle. Is our complicity in this travesty motivated by a genetic inability to face the truth? Or is it that we are so utterly demoralised we feel we do not deserve to be told the truth? Those photographs of Bertie Ahern swanning around Fairyhouse with his "dig-out" buddy Joe Burke, while bar-room chatter across the land talks up 'Whiparound'-Bertie-for-President, evoked Pearse's verdict when he decried: "The fools, the fools, the fools..."

Another of the illusionary stories in the newspapers the other day was about Cromane Pier in Kerry. It seems politicians have been promising the pier since the 19th century and still they say it's coming. And still people will go out and vote for the politicians who keep promising the pier, just as did their parents and grandparents and their long-dead antecedents.

Our leaders know our appetite for fairytales is insatiable. So they feed us a steady supply, peppered with hypnotic words like "transparency" and "accountability". A current favourite is that crony capitalism, with its greedy, élitist cross-over directorships, is a thing of the past. Cronyism, we are told, is over.

Well, check this out for a game of musical chairs. Seánie Fitz quits Anglo Irish Bank in disgrace. His seat is taken by Donal O'Connor, chairman of Dublin Docklands Development Authority, where Seánie and his fellow Anglo director, Lar Bradshaw, previously reigned. O'Connor's DDDA seat, in turn, is taken by Gerry McCaughey, a poster boy of the builder brigade who brought us to the gates of Hades. McCaughey resigns a fortnight later when it emerges that he denied the exchequer €4.7m via a tax-avoidance scheme. When Bank of Ireland needs a new chief executive, it appoints Richie Boucher who, it turns out, advised Seán Dunne on the financing for his Ballsbridge site and urged Dublin City Council to grant it planning permission.

Now the state is setting up a half-way house to detoxify the banks' and builders' debts. Nama, this love child of incestuous market greed, is the brainchild of the economist, Peter Bacon.

Dr Bacon looks pleasant enough. He might be the most decent man you could meet. But he should not be dictating the bailout of the banks' development liabilities. Up to last summer, he sat on the board of Ballymore Properties, Ireland's biggest developer and winner of the controversial U2 Tower project in Dublin's docklands. Ballymore is reported to have borrowed up to a billion euro from the nationalised Anglo Irish Bank. The company's boss, Seán Mulryan, has been a regular development partner of Seán Dunne (whose Ballsbridge site is exempt from Nama's remit because the financier, Ulster Bank, is a non-national).

Apologists for Bacon's pivotal role in structuring Nama argue that he was Ballymore's European director and, therefore, uncontaminated by the company's liaisons in Ireland. What they do not mention is that, in Britain, for instance, Michael Fingleton's Irish Nationwide, which is seeking to extend the state guarantee scheme to pay €2.2bn it owes to overseas lenders, has partnered Ballymore in development projects. Ballymore and Irish Nationwide have a joint venture company registered in Oxford called Clearstorm to which Bacon was appointed a director in 2003.

Just because Teflon is invisible when it is wrapped around the Golden Circle doesn't mean it is a figment of our imagination.

The rest of it, though, you just couldn't make up.

jmccarthy@tribune.ie