PROPAGANDA? NO THANKS, WE’RE EXHAUSTED Gene Kerrigan
Never have we needed information more — politicians need to supply it clearly and on the record, writes
THREE things will decide how this goes, and right now two of them are in rag order. The three things are public morale, political leadership and science.
Science has been playing a blinder, but even there the news is not all good.
Our expectations of our leaders were already barely ankle-high. After this past week, our expectations of them have sunk to subterranean levels.
Public morale?
I haven’t seen any scientific measurement, but the exhaustion is self-evident. It’s not the exhaustion of missing the usual social pleasures — though that in itself is not to be sniffed at. It’s the exhaustion of living in danger. The exhaustion of losing work — not just missing the money, but the routine, the sense of being part of things, making a contribution, the sense of achievement.
A large part of society has experienced the draining feeling that comes with the permanent shortage of money, the lack of the necessities it buys. And missing the comfort of knowing what you spend will be replaced next payday.
The longer it goes on, the greater the fear that this is the future — jobs that won’t be there to go back to, careers undone, whole businesses gone under.
Above all, time wasted staring at a wall at home, two metres distant from everyone when we go out — and always wondering what’s next.
Politicians become exhausted too. And make bad decisions. Then, chastened, fearful, they take forever to make any decision.
Meanwhile, parents know that children’s feet grow. They wonder where they’ll get the kids’ feet measured so they can buy shoes to send them back to the schools the politicians are talking about reopening.
Exhaustion comes from the innumerable times such problems have to be thought through.
Some of us envied the freedoms, choices and possibilities of today’s young people — and for many of them that has vanished. Huge efforts they made to assess potential, sort through possibilities and try out prospects all thrashed.
We can assure them this is a setback, a blip in a lifetime of possibilities — but they’re the ones living it.
The old had to hide from the virus, to squander too big a portion of their small ration of time.
And many have lost out in the worst way possible.
Morale is sapped by the mounting deaths. In mid-November, after eight months of it, we hit 2,000 deaths. It then took less than eight weeks more to pass 3,000. And a few days ago, after just another three weeks, we passed 4,000 dead.
Morale is sapped by the relentlessness of it all, and the mounting evidence of the damage the virus does to those, of whatever age, who survive.
Exhaustion comes from uncertainty. Most of us are weary, unsure, but we’re paying attention. We know there are people looking out for themselves, but there always are.
The vast majority of us know that we either fight this collectively or it will chew us up, one by one.
In such circumstances, competent political leadership is essential.
Long, bitter, sigh...
There was, on Friday, a three-hour meeting of the Coronavirus Cabinet Subcommittee, at which nothing was decided other than to pass the decisionmaking to the full Cabinet, on Tuesday.
At some point, there appears to have been a decision for the Coronavirus Cabinet Subcommittee to meet again on Monday.
Look, this is an emergency. It’s already stretched over months, it may stretch over years, it will remain an emergency, and in an emergency decisions are made according to need, not schedule.
Long, leisurely breaks are off the agenda. So be it if that means politicians don’t get to discuss with local party hacks the effect all this might have on second preferences in the election boxes from the top end of the constituency.
Stop worrying about the next election. This is what you’re allegedly in politics for. This is it. You will never face more crucial decisions. Stop faffing about.
You will not be remembered for winning a second seat in some marginal — you will be judged on the body count of your constituents.
Act on knowledgeable advice. When the evidence mounts, change your mind. Tell us so, and why. When you make the wrong choice, accept it, admit it, and get over it.
Argue things through, tell us the choices, then speak with one voice.
On the record.
Last week, we had everyone from the Taoiseach and Tánaiste down yapping, top-of-the-head stuff about what might or might not be done at some vague point in time. They sowed confusion.
Meanwhile, anonymous Cabinet “sources” were saying things that might or might not be true, depending on how awake they were during Cabinet discussions.
I know, reporters love to get “sources”, it makes them feel like Woodward and Bernstein. But there’s no reason why the media should grant anonymity to any politician to peddle a version of information the public has a right to know.
The only time a politician needs anonymity might be when they’re telling us something is being hidden from us.
Dismantle your propaganda machine, appoint a Cabinet spokesperson through which the public is kept informed. Explain the why and the wherefore of every decision. Hide nothing.
Last week’s confusion, with consequent effects on public morale, is what comes of making propagandists of people who should be informing us.
There are times when we need politicians to speak — to reveal things, to explain things. Always they should do this on the record.
Never have we more needed information and clarity. The way to stop the tattle of know-nothings is when those with information reveal it. On the record.
The science has been amazing. By removing the market pressure from the process, vaccine research was liberated. These amazingly knowledgeable people are not done yet.
But, dangers await us. There was a report a couple of days ago of two variants — one from the UK, one from California — combining.
The recombinant thankfully fizzled out. But it pointed to unwelcome possibilities.
As dear old Albert Reynolds might have said, that’s viruses for you.
Control them or kill them, or they’ll keep looking for mutational possibilities that will slaughter us.
Through all this we have to endure the cranks and the headbangers. On social media, sensible people discuss real problems and treat one another with care. And, a few tweets down the timeline there’s some chancer — equipped with a supply of random capital letters — declaring that: “WE are living in a dictatorship, with Hitler MARTIN... All we are short of now are gas chambers.”
(And that’s an actual tweet, from Friday last.)
People are thankful for the skills of a doctor who cuts their chest open, rearranges the arteries in their heart, sews everything back together and prescribes an array of medicines to keep them alive long enough to recover.
But when the same doctor holds up a syringe and recommends they take a vaccine, they sneer: “You’re not going to trick me, you ba **** d. I’ve seen a YouTube video about them things.”
Beyond the noisy eejits, there are people with sensible worries, real questions that deserve answers. Nphet needs to answer those questions — calmly, tolerantly, respectfully — explaining clearly the science behind the protections.
And the politicians need to treat us with respect.
Give us information, explain possibilities. Explain decisions.
Do so openly, and always on the record.
‘Beyond the noisy eejits there are people with sensible worries and questions and they deserve to be answered calmly, tolerantly and respectfully’
SINCE the beginning of 2021 fears have grown that inflation, which has remained muted since the global financial crisis in 2008, is finally on its way back. US 10-year break-even inflation expectations, derived from Treasury yields, have now risen to 2.3pc — their highest level since 2014 — signalling bond investors are increasingly worried about price pressures.
Over the past decade there have been many accusations that Central Bank policies such as quantitative easing would lead to rampant inflation, often argued in slightly hysterical terms, and describing printing money as ‘debasing’ the currency. Suffice to say, these warnings have failed to come to fruition, with CPI inflation remaining at muted levels across the OECD over the past decade
However, concerns are growing the Covid-19 pandemic has given a free hand to many governments to run enormous fiscal deficits, facilitated by central banks. While loose government spending may have been the correct response during the pandemic, it may be difficult to wean politicians off zero interest rates and to rein spending back in as vaccines are rolled out and life returns to normal.
Writing in the Washington Post, former US undersecretary at the Treasury Larry Summers argued Joe Biden’s $1.9trn (€1.6trn) stimulus plans could trigger “inflationary pressures of a kind we have not seen in a generation, with consequences for the value of the dollar and financial stability”, attracting the ire of the White House and a rebuke from the US Treasury Secretary Janet Yellen who argued the risk of doing too little outweighed the risk of doing too much and that the Federal Reserve had the tools to deal with inflation if it emerges.
However, Summers is not alone. Former IMF chief economist Olivier Blanchard lent further respectability to inflation concerns when he said he agrees with Summers and that the “$1.9trn programme could overheat the economy so badly as to be counterproductive.”
Last week, President Biden argued the US economy would come “roaring back” if his plan is passed. It is worth bearing in mind the enormous quantum of US fiscal stimulus being considered. The $1.9trn stimulus is equivalent to 9pc of GDP and comes hot on the heels of €900bn agreed late in 2020, worth another 5pc of GDP. The Congressional Budget Office’s latest forecast was for the US Federal deficit to equal €2.3trn in 2021, or 10pc of GDP, even before counting the costs of Biden’s new proposals.
Is there any need for this largesse? It could well be argued the US economy will bounce back on its own steam as restrictions are lifted. The president promised last week that 600 million doses of the Covid-19 vaccine will have been delivered by July, accessible to all Americans.
Biden’s plan incorporates $1,400 cheques to US households only tapered down for those earning above $75,000, extra unemployment benefits and an increase in the minimum wage to $15 per hour. Earlier this month House Democrats rejected proposals to cut off payments for those earning over $100,000. This broad-brush approach hardly seems necessary, eschewing targeting spending at households who have lost their jobs.
Furthermore, the US household savings rate more than doubled to 16pc in 2020, showing many households are now in a far better financial position to fund spending as the shops re-open. So there is probably limited need to stimulate consumer spending.
For now the Federal Reserve is staying out of the fray, the minutes of their January meeting, published last week, indicated the Federal Open Markets Committee (FOMC)
still sees the risks to inflation tilted to the downside. They focused on a likely slow recovery in the labour market and signalled that the Fed will maintain the $120bn monthly pace of asset purchases under its quantitative easing programme for some time.
However, in recent weeks the travails of GameStop and the surge in Bitcoin have added to angst that there may be undue froth in financial markets, with the Federal Reserve conceding valuations are elevated although this may reflect surging trading by retail investors through electronic platforms rather than low interest rates per se. It may still be the case that Biden’s stimulus plan will be watered down, facing resistance from some Democratic senators such as Joe Manchin, baulking at the high price tag.
Sunak’s difficult budget
The arguments in the United States could well be a precursor of tensions on this side of the Atlantic. Rishi Sunak is facing a difficult task in his March budget — aiming to plan a path back to sustainable public finances but with back bench Conservative MPs appearing to be against tax rises of any kind. Boris Johnson, unlikely to be swayed by cool-headed analysis, is still focused on the ‘levelling-up’ agenda of directing lavish public capital expenditure to shore up ‘redwall’ seats won during the general election.
For now, the ECB under Christine Lagarde will likely remain committed to keeping funding costs low to maintain an accommodative monetary policy stance.
However, in time as the euro area economy recovers, more hawkish voices will return — arguing the Pandemic Emergency Purchase Programme will have to end and that the ECB cannot be seen to facilitate unsustainable fiscal policies.
Counting the cost of regulation of Irish mortgage lending
This week a report from Banking Payments Federation Ireland (BPFI) illustrated why Irish mortgage rates are high compared to Europe.
The study of 600,000 mortgages worth €83bn across the five retail banks found
Irish banks are required to hold about three times more capital for the perceived risk of their mortgage loans compared with Europe.
As if to underscore the point, NatWest’s decision to run down Ulster Bank in the Republic of Ireland highlighted mortgage lending isn’t as profitable as it is often perceived to be. Too often Irish mortgage rates are simply compared against deposit rates close to zero, without considering the stricter capital requirements, or technically speaking, the risk-weight on mortgage loans.
Clearly, regulators want to insure there is no repeat of the Celtic Tiger era. Also, Ireland’s economic performance has been more volatile than its European peers over several decades.
However, the typical investment disclaimer is that past performance is no guarantee of future results. The BPFI report argued that insufficient credit is being given to safer mortgage lending standards over the past 10 years, governed by the Central Bank’s strict mortgage lending rules.
For example, the median loan-to-income ratio amongst Irish first-time-buyers is just over three times income now but was close to 4.5 times during the Celtic Tiger era. It is currently 3.5 times in the UK.
Austrian and Belgium borrowers can borrow up to six times their income, but Irish banks are required to hold more than double the level of capital on similar loans, judged by their loan-to-value.
There is also the thornier issue of how Ireland’s mortgages arrears have resolved in the past — predominately by Irish banks selling off non-performing loans at substantial discounts. Even so, the latest Central Bank data shows in 2020 there were still 5,000 mortgage accounts in arrears over 10 years and a further 11,500 in arrears by between 5 to 10 years. The BPFI highlighted that Ireland has one of the worst outcomes in the recovery of security of mortgages under judicial process, around 11pc compared with 46pc in Europe — which has accentuated losses.
What can we expect going forward? The BPFI report concluded gloomily that capital requirements on Irish mortgage lending will only fall gradually, necessitating higher rates, despite new lending being at substantially lower loan-to-income ratios than in the past.
Still if there is one silver lining of the pandemic, it is that Irish banks may be able to show that mortgage lending is now more resilient to unforeseen shocks, bolstering their case to ease capital requirements gradually.