BlackRock, stress tests, and more of the same: it's time for an alternative

Ireland's crisis is also an international one - a fact that is routinely ignored in the standard media narrative. If only the Galway Tent had blown into the sea in 2001; if only the line between business and politics had been drawn in barbed wire; if only Lenihan hadn't guaranteed the banks; if only...While it is true that the scale of the crisis in Ireland is unique, the austerity mania currently sweeping this country is certainly not, and points to the wider, international crisis that has been ongoing since 2008. Add to this the fact that decisions that will affect social and democratic life in this country for a very very long time are being made by institutions and bodies that the Irish public neither elected nor appointed, and it should be clear that it's about time we raised our heads a little and took a look beyond FF's cronyism for both the rationale for and alternatives to what one bond trader, in an hilarious burst of understatement, described as the 'ethically...questionable policy' of using public money to pay private debt. We must avoid a lapse into isolationalism, argues Hugh Green, because if we do retreat into an isolated passivity, we will be made to suffer more and more, and we will do so silently.

After the general election, and yesterday’s exercise in discovering how much the Irish population will have to pony up to cover the losses of German, French, and British banks, the laundry of the EU-IMF ‘bailout’ appears complete. The ‘bailout’ is no longer presented as a burden, but as part of the furniture: an unwelcome bequest from the decimated Fianna Fáil party. A tiger-print sofa the bailiffs refuse to take away. In case there were any lingering doubts about how supine the Irish government was prepared to be, Michael Noonan did the honours: ‘I want to be clear for the benefit of our people and of market participants, that we are committed to the EU-IMF programme.’

The main product of Enda Kenny’s ‘democratic revolution’, so far, then, is a sort of normalised robbery, where, in the words of one bond trader lapsing into moral awareness, ‘Ireland is closing kindergartens to pay senior bondholders – ethically that is a very questionable policy.’ Or perhaps it is a crackpot magic realism, in which a pained insistence on assuming the grim reality of austerity, and on intensifying the neoliberal policies that caused the crisis in the first place, is believed to produce magical results at some point along the line.

The Ireland First experiment in direct oligarchy was something of a damp squib, not least on account of a couple of its participants featuring in the Moriarty Report, but there are telling signs that, in this hour of need, some people are still holding out for a benevolent oligarch to work a bit of wizardry.

Consider Larry Fink. In the vespers for the banking stress test, the Irish Independent fixed its gaze on the CEO of BlackRock Solutions, the firm selected by the Central Bank of Ireland to conduct the tests. ‘Wise man of Wall Street' holds key to stress-test credibility’ read the profile headline. After outlining how Fink had become ‘famous for inventing securitisation -- where banks package up individual loans and sell them off to investors in chunks’ –and we all know how well that turned out - the article concluded that ‘Ireland will now hope that some of his market credibility will rub off on the country's banks.’

A Vanity Fair profile back in April 2010 sheds a little more light on the ‘good oligarch’ ‘at the hub of the wheel of American capitalism’. His firm is said to be ‘like the Blackwater of finance, almost a shadow government’. It reports unhappiness about how BlackRock wins key US government contracts: with no competitive bidding. In the case of Ireland, specialist blog site NAMA Wine Lake notes how Patrick Honohan had acted under instructions to engage BlackRock, ‘presumably instructions from the IMF or EU.’

Despite the catastrophic consequences of the securitisation model Larry Fink developed, he seems proud of his achievement: ‘Even in my 20s, I felt there was an enormity to what we were doing to help.’ No doubt his lawyers have since advised him what enormity actually means.

So, the fact BlackRock was ‘brought in’ to do the stress tests should give a clear indication of precisely whose interests were behind this particular round of technocratic knob twiddling. But rather than receiving some kind of critical analysis of who BlackRock are (‘far and away the largest money manager on the planet’ with close ties to the US Treasury), and how, when it comes to states putting the interests of financial institutions before the interests of the population, they have a horse-sized dog in the fight, the exercise and its findings are presented as the fruit of the most disinterested scientific endeavour.

It is not hard to detect a certain amount of relish this morning in the national press arising from the government’s failure to extract any sort of concessions from the EU-IMF-ECB with regard to ordinary people shouldering speculator debt. Stephen Collins in the Irish Times heralds the ‘dawning of cold, hard economic and political reality’ whilst Fionnan Sheahan pours scorn on Fine Gael’s ‘prattling on in a populist manner’. We need not expect any probing of the consequences for democratic government from either quarter, but should note in passing that the scorn for ‘populism’ is shared by ECB chief economist Jürgen Stark – author of the militantly anti-populist EU Stability and Growth Pact.

Faced with this imposition of ‘reality’, according to which the wishes and the welfare of the population must be ignored and the pronostications of Wall Street oligarchs, Frankfurt technocrats and their economist courtiers are treated as though they were written on tablets in heaven, we need to come up with some realism of our own.

First, a right-wing Irish government such as this one shares far too much with the world view of the ECB and other fanatical right-wing governments in Europe to take any resolute action on the part of the population.

Second, its supposedly social democratic junior partner is no less supine than any of the social democratic governments across Europe who bow to the dictates of ‘the markets’: shrinking the welfare state, driving down wages and making it easier for firms to fire workers and outsource jobs.It deserves to eat some crow for its ‘Frankfurt’s way or Labour’s way’ soundbite, but we should not discard the essential truth of that statement: it is only a militantly organised labour movement, not the occasional testy tête-à-tête at a European Council meeting, that can overturn the neo-liberal dynamic overseen by the EU-IMF-ECB troika.

Third, in so far as what resistance there has been so far from the Irish labour movement to the austerity agenda can be summarised as being equal parts ritualistic and fatalistic, we should emphasise that trade unions have the same choice articulated by Dan Hind in his excellent analysis of the recent UK March for the Alternative:

They can either remain committed to a defensive agenda, which leaves the question of political economy untouched. Or they can begin to ask what an alternative would actually look like.


As for the leaders of the trade unions, they too have a choice. They can remain committed to a narrow wage-and-conditions agenda and pretend that they have no control over the political party that they bankroll. Or they can begin to recreate their institutions as venues for debate about the common good. It is workers that create value – both marketable goods and the commonwealth of hospitals and schools and clean streets and safe drinking water. It is workers who must now meet and decide how best to reform matters. The Parliament is not responding to the needs of the country. It is fiddling its expenses while putting on a serious expression and insisting that there is no alternative. And, anyway, it is the other side’s fault.

Fourth, the international character of the crisis is habitually omitted from Irish media narrative, for lots of different reasons - e.g. the reliance on Irish government officials for briefings, the systematic denial that there might be anything wrong with capitalism other than a severe bout of cronyism - but the effect of this omission is noxious: by crowing over the apparent powerlessness of Irish democracy to do anything but accept the dictates of finance capital, it fosters a despairing isolationism that makes it all too easy for draconian measures to be introduced without a whit of forceful dissent.

We cannot allow the ongoing punishment to be portrayed, as both Irish and European elites would have it, as a domestic affair that is the product of collective delinquency and stupidity. A couple of excerpts from recent interview with Professor Richard D. Wolff give an example of the type of perspectives we need:

Wolff: In order to focus it all on Greece and Ireland you have to want to avoid the pain of adjustment elsewhere – that’s what’s going on. The British leaders, the French, the German business community, they would like to escape from the economic costs of this crisis, and they would like to see all of those borne by poorer countries like Greece and Ireland. So if you destroy your own economy in order to keep paying off your sovereign debt, you save them from the economic pain that they really ought to be bearing because they had more to do with bringing this crisis than Ireland or Greece ever could have.


Let me give you a parallel of this. Here in the United States we have been speaking for about a year and a half about a ‘recovery’. All that has happened in the United States is that the business community has succeeded in getting the government to pour huge amounts of money into banks and insurance companies and large corporations. Their profits have recovered. The mass of unemployment has not been touched. The foreclosures, people being thrown out of their homes, is larger in 2011 than it was in either of the previous 2-3 years. So what we’re seeing in the United States is I think what you’re seeing in Europe: a recovery for some, and indeed for those who were most responsible for bringing the crisis, who have received most of the benefits of government money to date, and they have decided to try to push the burden of paying for all of this onto the poorest and least strong among them. In our country, it’s the mass of the working class. In Europe, it’s the working class especially in the poorer countries like Greece and Ireland.

It is clear, both in the case of Greece, and even more in the case of Ireland, that the austerity programmes supported and promoted by the IMF, for example, that these problems in many ways make the economic crisis worse. They are not solutions. They maintain the income flow of the banks and investors, but they do so at the price of economic damage done to the underlying working class, commitment to labour, infrastructure, social structure of a country that is put through this kind of crisis.

Against the laundry operation of the bailout, there is a lot of dirty linen that needs airing in public, and perspectives such as that of Wolff’s are vital in this respect.

Finally, we should recognise that the task of replacing the political economy of neo-liberalism with an alternative, given the exemplary punishment currently being inflicted by the EU-IMF-ECB troika on the Irish population, cannot be confined to Ireland alone. This entails the formation of new alliances with anti-austerity movements across Europe and beyond.

Yesterday’s events ought to demonstrate that breathless promises of reform from parliamentarians no longer cut any ice. A couple of years back, Leo Panitch wrote in Foreign Policy magazine that ‘reformist politicians who think they can do away with the inherent class inequalities and recurrent crises of capitalist society are the real romantics of our day, themselves clinging to a naive utopian vision of what the world might be.’ The hour for cold, hard economic and political reality has arrived, but it is not the reality of the political correspondent or the good oligarch; it can only be imposed by the popular will.



This is a revised and updated version of a piece that originally appeared on Hugh Greens' blog, The Punishment of Sloth.

Image top via waywuwei on Flickr.