It was coming up to Christmas in 1987. Ireland was going through a recession not unlike the one it now faces. Property developers were going bust like three day old balloons and Dublin airport was filled with families welcoming home emigrant children.
I had the good fortune of having a job in a recession proof industry at the time. We were nominally an accounting practice but at the time, we made most of our money from liquidations and receiverships. As a card carrying Socialist, I had the occasional squirm of conscience in carrying out this task but most failed ventures were pubs and hotels run by dodgy businessmen who deserved little sympathy.
But sometimes we’d come across a deal that pulled at the heartstrings. Property developers do not normally fall into this category. These days they have a reputation up there with war criminals and pedophiles at the moment but unfortunately they don’t live in splendid isolation. When they go down, like a king at the top of a deck of cards, they bring down lots of ordinary people with them.
The guy we were dealing with was building a school for the Government (probably the only building work going on the time) and had employed a number of sub contractors who worked for a year on the project and were promised payment upon completion when the government cheque would come in.
It was a façade based on the never/never. He ran up an overdraft with the bank and ignored the advice of his accountants that it was all going to end in disaster. And so it did. When the cheque came in from the Government, it was barely enough to pay off the bank and accountants. And so, the poor old subbies who had worked for a year with no pay were left with nothing.
Lots of them turned up at our office, anxious for news on whether they would get any payment. We didn’t have the heart to tell them that Capitalism looks after it’s own and in a dog eat dog world, it’s no fun being a poodle.
It didn’t take us long to see that a massive fraud had taken place. The bank could see the writing on the wall and was ready to pull the plug and force the company into liquidation. The company’s auditors convened a hurried meeting between the bank and the development companies Managing Director. They stupidly left a copy of the minutes of that meeting on the file they handed over to us and we didn’t need to be Wikileaks to spot its importance.
The deal they struck allowed the company to continue until the government payment came in. On that day, the developer wrote and cashed two cheques. One for his outstanding salary from the business and the other for the company’s accountancy fee. What was left wasn’t enough to cover the overdraft at the bank but it brought it down to a level they could live with. The following day, the company went into voluntary liquidation and the taxman and the sub contractors were left with nothing but sour memories.
I called into my boss’s office with the news of this crime and I felt pretty chuffed with myself. I worked in a sleepy provincial town and it wasn’t often that you caught the countries biggest bank and the town’s largest auditors in a massive fraud. He saw it differently of course. Business was business back then and he wasn’t about to sue the people who gave us most of our insolvency work. I tried to argue but he convinced me that the sub contractors wouldn’t be helped anyway and I gave in.
Two days later I was working late when a knock came to the front door. I answered it and two guys in leather jackets asked for my boss. He was the official liquidator and his name was on all the letters we had sent to creditors. They claimed to represent one of them, a carpenter that was owed about 11 grand, a year’s income in those days. I explained that the boss wasn’t in but they didn’t seem to believe me. It was at that point that one them pulled back his jacket to reveal a gun sticking out of his belt. Suddenly I felt like I was trapped in a gangster movie and that Buggsy Malone was going to appear and rescue me.
I’d like to say I did something heroic, but all I could muster was a croaky response that I would do my best to get word to my boss. I eventually tracked him down and two days later the managing director of the development company met the carpenter and handed over an envelope containing approximately 11 grand. I was left pretty disillusioned by the whole affair, particularly as I’d sat in several meetings where the developer had sworn to my face that he had lost everything in the collapse.
I guess I learned never to trust developers after that which might explain why I never got caught up in the property frenzy that defined Celtic Tiger Ireland. It also shows that Irish Banks didn’t just learn dodgy practices in the naughties. They have always been more interested in protecting their own interests with scant regard for the little people or the law.
The other party to come out that affair smelling badly was the accountants. As one myself, I’m pained to admit that they were major conspirators in the black economy that poisoned the 1980’s and they also haven’t covered themselves in glory in Ireland’s recent troubles. Think of all those bankrupt banks that received clean audit reports or insolvent builders that were allowed to trade for longer than they should because some accountant had said they were in the black.
If you’re looking for culprits in the wreckage of the Irish economy, then look no further than the Accountants, Banks and builders. I just hope that there are no guns involved these days.
Tuesday 21 December 2010
Thursday 9 December 2010
How many Economists does it take to change a lightbulb?
Back in the dark days of 1981, I was about to enter my last year of secondary school. It was a time of big decisions. How would I spend my 50p pocket money that week? Should I ask my mate Dave to pass a note to a girl he knew that I fancied? And what should I drop from my final exam list. In our school, you studied eight subjects until the beginning of your final year. Then you had to drop one before the final push for glory.
In my case, it was a choice between History and Economics, or a toss up between the future and the past, as it was explained to me at the time. After some thought,(well as much as I could squeeze in between thinking about girls and football) I decided to drop Economics. I was much more comfortable with the ghosts of the past, than I was with the uncertainty of the future. My previous year in class had thought me that if you put two Economists in a room, you’d end up with three opinions.
It was custom to stand outside class on the first day of final year to break the news to whichever teacher you were spurning. Most of them took it well as you were normally dropping a subject that you hated and were crap at. And the teacher generally held similar opinions about you. I was in a more delicate position. Economics was actually my best subject. I scored top marks in class the previous summer and our teacher; Mr. Dunne treated me like I was John Maynard Keynes.
There were eight of us waiting that day and apart from my good self, the other seven had been told to be there to discuss their future with Mr. Dunne. Some would be told to drop Economics altogether while the rest were been shipped down to the lower level class where the only requirement for entry was that you knew which end of the pencil to use for writing.
Most of them took it well but one poor soul made a last desperate attempt to cling on. “Mr. Dunne, I think I am well placed to excel in Economics, I have a fundamental understanding of the concepts and I think my summer exams demonstrate this”, he said in a staccato voice which suggested that he was repeating a prepared speech his Father had drummed into him the night before.
“You got 14% in your summer exams”, Mr. Dunne said drily. The poor soul looked indignant and his face reddened. “I got 15% sir”, he blurted.
I wanted to point out that there was a 7% difference in their assessments, which was within the margin of error of most economic forecasts. But I sensibly judged that neither of them were in the mood for humor.
Finally I was alone with Mr. Dunne and got to deliver my break up speech. I started with a “It’s not you, it’s me” approach and moved into a more “Can we still be friends” tactic when this wasn’t working. Mr. Dunne was pretty upset and told me I throwing away the chance of a top grade in my final exams. I was prepared for this however and explained that I had confidence that I could obtain the same grade in History. At this point, he asked me to wait where I was while he summoned my History teacher from the staff room. I watched the two of them march towards me and felt happy that my favorite teacher was coming to defend me. Alas, he had surrender in mind.
“Why are you dropping Economics”? He asked. “Mr. Dunne here tells me that you’ll get an A in your Leaving exam.”
“I think I’ll get an A in History too”, I confidently replied.
“No, you won’t, you’ll get a C”, he told me.
I was shocked at the betrayal, but dug my heels in. A year later I opened up my exam results and found that my History teacher was right. I was disappointed and asked myself “if only”. If only he’d been as good at teaching as he was at predictions.
Twenty nines later however I am regretting that I didn’t stick with Mr. Dunne. Who would have guessed that economists would suddenly become sexy? It’s hard to turn on the TV these days or open a newspaper and not see some pointed head guru tell you that the world is going to hell in a handcart. The Irish media is certainly full of that and the website irisheconomy.ie is probably more subscribed these days than pornography. Economists are lining up to say “I told you so” when most of them championed the Celtic Tiger and told the Irish people there would be a soft landing. In hindsight I think they meant that Ireland was going to land in the shit but they didn’t explain it that way.
I notice that five of the top ten bestsellers in Ireland now are written about or by economists. Who would have thought that if I’d just stuck with it, I could have fulfilled my dream and become a published author. I suspect I would have been greedy however and tried to corner more than just the dry economic market. I would have told the story of the death of the Irish Tiger by having vampires attack the Central Bank (for the teenage girl market) while having the female head of the ECB fall madly in love with the evil master of the IMF and have them engage in wild sex in a back room of government buildings while the Minister for Finance filled in the country’s bankruptcy papers upstairs. I can see Hollywood buying up the rights as I type, with Jennifer Aniston and Russell Crowe in the lead parts.
Perhaps I could find a role for Mr. Dunne. Although I dropped economics that year, he thought me enough to see that the bubble was bursting and it was time to get the hell out. For that I am very grateful.
In my case, it was a choice between History and Economics, or a toss up between the future and the past, as it was explained to me at the time. After some thought,(well as much as I could squeeze in between thinking about girls and football) I decided to drop Economics. I was much more comfortable with the ghosts of the past, than I was with the uncertainty of the future. My previous year in class had thought me that if you put two Economists in a room, you’d end up with three opinions.
It was custom to stand outside class on the first day of final year to break the news to whichever teacher you were spurning. Most of them took it well as you were normally dropping a subject that you hated and were crap at. And the teacher generally held similar opinions about you. I was in a more delicate position. Economics was actually my best subject. I scored top marks in class the previous summer and our teacher; Mr. Dunne treated me like I was John Maynard Keynes.
There were eight of us waiting that day and apart from my good self, the other seven had been told to be there to discuss their future with Mr. Dunne. Some would be told to drop Economics altogether while the rest were been shipped down to the lower level class where the only requirement for entry was that you knew which end of the pencil to use for writing.
Most of them took it well but one poor soul made a last desperate attempt to cling on. “Mr. Dunne, I think I am well placed to excel in Economics, I have a fundamental understanding of the concepts and I think my summer exams demonstrate this”, he said in a staccato voice which suggested that he was repeating a prepared speech his Father had drummed into him the night before.
“You got 14% in your summer exams”, Mr. Dunne said drily. The poor soul looked indignant and his face reddened. “I got 15% sir”, he blurted.
I wanted to point out that there was a 7% difference in their assessments, which was within the margin of error of most economic forecasts. But I sensibly judged that neither of them were in the mood for humor.
Finally I was alone with Mr. Dunne and got to deliver my break up speech. I started with a “It’s not you, it’s me” approach and moved into a more “Can we still be friends” tactic when this wasn’t working. Mr. Dunne was pretty upset and told me I throwing away the chance of a top grade in my final exams. I was prepared for this however and explained that I had confidence that I could obtain the same grade in History. At this point, he asked me to wait where I was while he summoned my History teacher from the staff room. I watched the two of them march towards me and felt happy that my favorite teacher was coming to defend me. Alas, he had surrender in mind.
“Why are you dropping Economics”? He asked. “Mr. Dunne here tells me that you’ll get an A in your Leaving exam.”
“I think I’ll get an A in History too”, I confidently replied.
“No, you won’t, you’ll get a C”, he told me.
I was shocked at the betrayal, but dug my heels in. A year later I opened up my exam results and found that my History teacher was right. I was disappointed and asked myself “if only”. If only he’d been as good at teaching as he was at predictions.
Twenty nines later however I am regretting that I didn’t stick with Mr. Dunne. Who would have guessed that economists would suddenly become sexy? It’s hard to turn on the TV these days or open a newspaper and not see some pointed head guru tell you that the world is going to hell in a handcart. The Irish media is certainly full of that and the website irisheconomy.ie is probably more subscribed these days than pornography. Economists are lining up to say “I told you so” when most of them championed the Celtic Tiger and told the Irish people there would be a soft landing. In hindsight I think they meant that Ireland was going to land in the shit but they didn’t explain it that way.
I notice that five of the top ten bestsellers in Ireland now are written about or by economists. Who would have thought that if I’d just stuck with it, I could have fulfilled my dream and become a published author. I suspect I would have been greedy however and tried to corner more than just the dry economic market. I would have told the story of the death of the Irish Tiger by having vampires attack the Central Bank (for the teenage girl market) while having the female head of the ECB fall madly in love with the evil master of the IMF and have them engage in wild sex in a back room of government buildings while the Minister for Finance filled in the country’s bankruptcy papers upstairs. I can see Hollywood buying up the rights as I type, with Jennifer Aniston and Russell Crowe in the lead parts.
Perhaps I could find a role for Mr. Dunne. Although I dropped economics that year, he thought me enough to see that the bubble was bursting and it was time to get the hell out. For that I am very grateful.
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