Read Beyond Spats to True Value of McWilliams' Book
07 November 2023
It would be a pity if the spats between David McWilliams and the various people who have taken mild offence at his remarks about them in 'Follow the Money' should distract us from the underlying value of what is really the only comprehensive road map through the economic crisis of the past year.
Vast armies of economists have offered their contributions at different stages, their advice and judgments creating conflict and dividing economic wisdom into different camps, factions that often do not hold together.
McWilliams has given us a very readable narrative and has done so with courage and good analysis. The narrative begins, more or less, with 'Brian Lenihan and Me' (Chapter Two), where Lenihan, in an RTE Radio 1 encounter on 'Saturday View', explained the slump in house prices and the drop in tax revenue as the result of "the Irish people deciding collectively to have a housing boom".
This is the kind of political rubbish that should make people gasp and reassess who it is they vote for. Instead, it was widely believed.
A great part of McWilliams' book is the real story of how the State, the banks and the developers cheated the population of all protection and care, thus leading to the fact that "the golden generation that was supposed to inherit the country became lumbered with the greatest debt legacy of any people in Europe".
At the first stage, within a fortnight of Lenihan inventing a new culprit in the Irish people "collectively" -- note the adverb -- deciding to have a housing boom, where the price of a semi-detached in Gorey, Co Wexford, was four times the price of a French chateau outside Bergerac, there was the famous meeting over cloves of garlic in McWilliams' house.
This meeting led to the guarantee. There was a great prevarication over it, all of it detailed at that early point in the book, and it is clear that McWilliams believed in a rigorous approach, a reform of the banking system, new controls, better regulation and, in the end, the winding up of some banks.
The guarantee worked. Lenihan said of its success, "the Brits are furious, so we must be doing something right". But it could only be right if it went the way that had been discussed. And, of course, it didn't. McWilliams ends the chapter with the sentence: "How wrong could I have been?"
The next 150 pages are as good an analysis of the dishonesty, slackness, deviousness and cupidity that wrecked the country and brought about the crisis. It has been the trouble zone for innumerable commentators. Turned as it is in 'Follow the Money' from the written equivalent of sound bites -- the 800-word articles that encapsulate our day-to-day lives -- into a full-scale narrative of how the Irish people have been robbed blind and betrayed by those who govern them -- the politicians -- and those who should look after their money -- the banks -- it is a different story. It is also a great read.
What is not dealt with in any detail in the book is the inevitable spat with Lenihan that came about when the author realised the whole scheme for rescuing the banks was turning into a nightmare, where the rescue and resuscitation of the blighted land that had been abused by developers was part of the scheme behind the National Asset Management Agency (NAMA), the story of which dominates the latter pages of the book.
In April 2009, the two men engaged in verbal fisticuffs in the pages of this newspaper in an argument about the double indemnity being offered to the banks by giving them the guarantee and then removing any day of reckoning by establishing NAMA. The people were being betrayed, the banks were being lavishly favoured.
The guarantee to the banks, which McWilliams favours at the beginning of the book, lost favour when the original terms of the guarantee were changed fundamentally by the introduction of NAMA, duplicating the whole rescue package. Lenihan said his interpretation was "confused". The book shows that there was never any confusion. For this alone, it is worth reading as a textbook of crisis.
McWilliams, long before, had made the sorry discovery that an unwholesome cabal of developers, Fianna Fail and the banks was still running the show. Lenihan claimed, then, that NAMA would force banks "to face up to the reality of their bad loans and to write down the value of these loans upfront". I remain unconvinced that such realism will prevail.
Any fool knows that NAMA can only operate through the banks and that the skills are in the banks. They are not in the National Treasury Management Agency, the Central Bank or the Department of Finance. Recently, the advertising for board members seemed like an indication of amateurism in the extreme.
At that stage, in April 2009, McWilliams proposed the logical, hard choice, coming down firmly on the side of NAMA. By September 2009 -- the latest point covered in his book -- his judgments on NAMA were much harsher.
In April, Lenihan castigated McWilliams for "living up to his reputation for swimming against the tide". I admire him for doing just that. It is a pity more journalists do not do the same. McWilliams does it with authority and analysis. He is a forensic commentator and admired for that quality. It would be a pity if the spats and comedy prejudiced the value of what he has to say.
Vast armies of economists have offered their contributions at different stages, their advice and judgments creating conflict and dividing economic wisdom into different camps, factions that often do not hold together.
McWilliams has given us a very readable narrative and has done so with courage and good analysis. The narrative begins, more or less, with 'Brian Lenihan and Me' (Chapter Two), where Lenihan, in an RTE Radio 1 encounter on 'Saturday View', explained the slump in house prices and the drop in tax revenue as the result of "the Irish people deciding collectively to have a housing boom".
This is the kind of political rubbish that should make people gasp and reassess who it is they vote for. Instead, it was widely believed.
A great part of McWilliams' book is the real story of how the State, the banks and the developers cheated the population of all protection and care, thus leading to the fact that "the golden generation that was supposed to inherit the country became lumbered with the greatest debt legacy of any people in Europe".
At the first stage, within a fortnight of Lenihan inventing a new culprit in the Irish people "collectively" -- note the adverb -- deciding to have a housing boom, where the price of a semi-detached in Gorey, Co Wexford, was four times the price of a French chateau outside Bergerac, there was the famous meeting over cloves of garlic in McWilliams' house.
This meeting led to the guarantee. There was a great prevarication over it, all of it detailed at that early point in the book, and it is clear that McWilliams believed in a rigorous approach, a reform of the banking system, new controls, better regulation and, in the end, the winding up of some banks.
The guarantee worked. Lenihan said of its success, "the Brits are furious, so we must be doing something right". But it could only be right if it went the way that had been discussed. And, of course, it didn't. McWilliams ends the chapter with the sentence: "How wrong could I have been?"
The next 150 pages are as good an analysis of the dishonesty, slackness, deviousness and cupidity that wrecked the country and brought about the crisis. It has been the trouble zone for innumerable commentators. Turned as it is in 'Follow the Money' from the written equivalent of sound bites -- the 800-word articles that encapsulate our day-to-day lives -- into a full-scale narrative of how the Irish people have been robbed blind and betrayed by those who govern them -- the politicians -- and those who should look after their money -- the banks -- it is a different story. It is also a great read.
What is not dealt with in any detail in the book is the inevitable spat with Lenihan that came about when the author realised the whole scheme for rescuing the banks was turning into a nightmare, where the rescue and resuscitation of the blighted land that had been abused by developers was part of the scheme behind the National Asset Management Agency (NAMA), the story of which dominates the latter pages of the book.
In April 2009, the two men engaged in verbal fisticuffs in the pages of this newspaper in an argument about the double indemnity being offered to the banks by giving them the guarantee and then removing any day of reckoning by establishing NAMA. The people were being betrayed, the banks were being lavishly favoured.
The guarantee to the banks, which McWilliams favours at the beginning of the book, lost favour when the original terms of the guarantee were changed fundamentally by the introduction of NAMA, duplicating the whole rescue package. Lenihan said his interpretation was "confused". The book shows that there was never any confusion. For this alone, it is worth reading as a textbook of crisis.
McWilliams, long before, had made the sorry discovery that an unwholesome cabal of developers, Fianna Fail and the banks was still running the show. Lenihan claimed, then, that NAMA would force banks "to face up to the reality of their bad loans and to write down the value of these loans upfront". I remain unconvinced that such realism will prevail.
Any fool knows that NAMA can only operate through the banks and that the skills are in the banks. They are not in the National Treasury Management Agency, the Central Bank or the Department of Finance. Recently, the advertising for board members seemed like an indication of amateurism in the extreme.
At that stage, in April 2009, McWilliams proposed the logical, hard choice, coming down firmly on the side of NAMA. By September 2009 -- the latest point covered in his book -- his judgments on NAMA were much harsher.
In April, Lenihan castigated McWilliams for "living up to his reputation for swimming against the tide". I admire him for doing just that. It is a pity more journalists do not do the same. McWilliams does it with authority and analysis. He is a forensic commentator and admired for that quality. It would be a pity if the spats and comedy prejudiced the value of what he has to say.
