CONFIDENCE - two years ago

The following was written in October 2007. Don't say I didn't tell you!

It is amazing what confidence can do for a person in any walk of life. It can lead them to incredible achievements and allow them surpass their wildest ambitions. It is also infectious and can lift the spirit of those who are around them.

Translate that confidence into an economy and you have what Ireland has become since the so called “Celtic Tiger” effect commenced in the early nineties. Economists differ as when and why it started. Some say that the devaluation of the Irish pound in 1992 was the kick start; others have radical and far fetched opinions that it was the success of the Irish soccer team in the 1990 and 1994 World Cups that gave Ireland Inc. the confidence to step forward and perform on the world stage.

Whatever the reason, and it is surely a myriad of factors, the Irish economy took off and when it did start to have an effect confidence soared. All the positives kicked in to bring the country onto an economic plateau that heretofore was considered unattainable.

Inflation lowered, interest rates dropped, banks started lending money again and allowed the entrepreneurial flair of the sixties “baby boomer” kids to flourish. Confidence created the property boom and the dot com mania that Ireland was so well placed to take advantage of with an educated workforce and the attraction of Ireland to American multinationals anxious to get a foothold in Europe. Add in the enlightened tax policies of Charlie McCreevy who with the bold stroke of halving the dreaded Capital Gains Tax (CGT) to 20% unleashed a wave of equity release from property owners and you had all the ingredients of the perfect economic storm.

And so it proved to be and even when the dot com crash of 2000 occurred, Ireland just picked itself up, dusted down and carried on. Fuelled by immigration, the property market roared forward and the penal 9% stamp duty on property filled the Government coffers to such an extent that budget surpluses became the norm in successive budgets with estimates always being exceeded. We became the envy of the world. We were in the economic equivalent of what is known in sport as “the zone”. Confidence propelled us up and up into the stratosphere and we could not see the fall ever coming.

This is October 2007. Mark the calendar! For this is the month that the dream starts to die. Confidence is an uneasy mistress, and when love turns to hate, the effect is catastrophic.

This week confidence walked out. Truth is, she was not faithful for the last year and Ireland, loves struck as it was, refused to acknowledge it.

The revelations this week that a number of high profile lawyers cum property developers were hoodwinking the banks by taking multi mortgages out on the same property has caused panic in legal and financial circles. Nobody knows how many more will surface. Added to the sub-prime lending time bomb that started in America, the complete collapse in Irish house sales, the drop in value of foreign holiday homes funded from ghost equity in Irish residential property and a big budget deficit looming together with the banks closing their umbrellas at the first drop of rain and now you have all the ingredients of that other perfect storm – the very nasty one.

George Lee was right after all. He had to be sometime. Leave now or forever perish!

And the last one to leave will not have to put out the lights. There will be no lights!