Mr Austerity, Guardian Profiles Brian Lenihan

I guess this is part of the Brian Lenihan tour of uncomfortable media hotspots, a feature in today’s Guardian with Economics Editor Larry Elliot. The tone is remarkably conciliatory, cautious and even underwhelming.  Stark contrast to the irrepresible talk of green shoots, doom mongers and Lehman Brothers from the party when talking for domestic consumption.

There is no doubting that the government has been stung by the sharpness of criticism from journalists and commentators in other financial centres, especially the City of London, where some might argue that analysis strayed into jingoism. As a result worries about those bond holders and internationaly investors needed to be tackled and Lenihan is on the…erm…charm offensive.

Anything of note in this? Well a few bits especially the complete acceptance of analysis as to where we went wrong.

Lenihan is frank about what went wrong: the export-led growth of the 1990s that allowed living standards to catch up with – and then surpass – the European Union average turned into frenetic domestic expansion fuelled by cheap money…

As a founder member of the euro, Ireland found itself with an abundance of easy credit. “When we changed to the euro, we had cheap credit. Financial institutions were over-leveraging, offering 100% mortgages and financing developers. We had a construction bubble that turned into a bust.”…

Lenihan says that the property crash on its own would have ensured a recession in Ireland. But what he calls “a perfect storm” has been compounded by two other factors – the collapse in world trade and the 30% depreciation in sterling.

Stuff that many in the Bertie Ahern era were poo-pooing as the IMF had worried about just such a scenario from as early as 2003. Yet we are all doom-mongers and nay-sayers a bad news brigade who want to run the country down. Rather than those positive happy go lucky types who fuelled the boom and recklessly managed their developer buddy’s interests.

“No party said property taxes should go up,” Lenihan says, noting that at the time Ireland was already running a healthy budget surplus. “We had had strong growth for two decades. Exuberance developed at the end and you had a crash landing.”

Ahem not true. From their 2007 Manifesto:

At present, a decision to rezone land can generate
large sums of money for the landowner. At the
same time, local authorities and, increasingly, local
businesses and the ordinary taxpayer are left to
bear the expense of creating and maintaining the
services and infrastructure that give the site its
value. We will:
• replace commercial rates with an annual Site
Value Tax on all land, except primary homes,
agricultural land and State property that is used
for non-administrative purposes, based on the
value that a particular piece of land would have if
there were no buildings or improvements on it;
• establish a Windfall Tax on development land,
as recommended by the Kenny Report, to
ensure that part of windfall gains made by owners
of development land as a result of rezoning and
service provision by local government will be
returned to the community on the sale of a site.

Step forward Trevor Sargent/John Gormley and the Green Party. Interestingly they don’t seem to take credit for making the calls.

And what of these Green shoots we are so ignorant for not talking up?

So does Lenihan see green shoots? Again, a carefully worded response. “I see a bottoming out. The rate of increase in unemployment has moderated. In the banking system, there is a stabilisation.”

He sees no need to administer any more pain during 2009.

Famous last words, but one’s many will hope are true.