Tuesday 17 July 2007

Bertie and The Inquisition

David McWilliams has written that Bertie Ahern's criticism of those who question the state of the economy is akin to the Inquisition and to the Church's reaction to Galileo who suggested the Earth was not centre of the universe. According to McWilliams, in both cases the Inquisitors were stamping out criticism to protect their own interests.

First about Bertie : to my knowledge, Bertie Ahern has never provided a coherent argument about why he believes the negative commentry is wrong. You see, Bertie doesn’t do reasoned coherent arguments. His remarks are usually about as clear as the mist rolling in over the Mull of Kintyre. He never makes an argument - he just huffs and puffs. I think the reason that his reaction now is a bit more significant is that he knows the Emperor is rather scantily clad. He knows in his heart that the Celtic tiger is merely concealling a very grave sickness. So it’s not just denial - as David suggests - Bertie knows fine well there are big shadows on the radar. He is angry that the naysayers won’t just leave him alone to operate his politicking after his own fashion. In fact, Bertie treats all critical voices the same way: those who speak out on the economy, the environment, our society, or opaque government are all just annoying noises preventing him from running his little fiefdom. For him, dissent is not the life blood of democracy, it's a hassle that ought to be pushed aside quickly with whatever measures he can get away with.

Back to the economy: Another part of the game is the soft-landing brigade. God knows, I am as keen as the next man for a soft landing instead of a hard one. But the curve in asset - read house - prices has been so steeply upwards that when it flattened it rather ressembled a huge machine racing along and knocked into neutral. Its momentum carries it for a while an will even propel it up small hills for a time. But unless it gets back in gear soon it will grind to a halt. If we meet a hill, the stop will be swift. Basically, a hard landing can begin softly. In the aftermath of the 1929 Crash, the stock market kept on crashing for 4 years. Little recoveries would suggest a bottom before each successive drop went deeper still. I wouldn’t push the analogy too far. This is not America in 1929. But the point is: house prices have just begun to fall and we don’t really know yet how far or for how long. So when the Inquisitors talk about soft landing they should be swiftly rebuted by asking, how on earth do you know?

1 comment:

Tomaltach said...

I see now that the slowdown in the housing market in the US has become more of a slump. It began with trouble in the so-called subprime sector. Now though, the malaise has spread to 'normal' mortgages and looks quite serious. Angelo Mozilo, CEO of Countrywide Financial, the bigget lender in the US, had this to say "home prices were falling almost like never before, with the exception of the Great Depression.”

Like I say to the soft landing brigade in Ireland : a hard landing often begins as a soft one. In Ireland's housing slowdown, it is too early to say.