Debt is Divisive
If you prefer you can listen to this essay here in part I, part II and part III – in total it takes less than ten minutes to listen to all three recordings.
Let us be very clear about this issue. Debt is divisive. At the risk of being inflammatory, it gets the same level of mixed emotion as the R word. Depending on your perspective, and level of solvency, it can be a very dirty word. Debt is genuinely divisive.
Where the needle turns is when the system breaks down, as it has done on an international basis. We are now living in unchartered waters where the rules have changed and the language is polarised. We need to understand what debt is, how we got into it, how we get out of it – and how we deal with debt when the system is broken. And we need to do this without the rhetoric of hate, shame and scapegoating. Nobody said debt was easy but it doesn’t need to be so hard. And it doesn’t need to cost life – no more please.
Let’s consider debt. In the good ole days, getting into debt was a normal rite of passage for an adult. A person finished education and got a job and moved out of home. In time, they maybe purchased a car which probably would require a motor loan and then in Ireland, they would buy a home, definitely requiring a mortgage unless they were a drug dealer. Acquisition of debt was normal. It was laudable even. In the good ole days, exiting from debt was fairly straightforward too. As a person aged, they paid off their mortgage and loans, entering retirement with a home in their name (no longer the banks) and a few bob in their pocket. This progression was fairly typical whether the person bought a semi-detached house in Tallaght or a red brick in Ranelagh. Debt wasn’t an issue. Whether they had a large mortgage on a big house or a modest one on a bungalow, debt was just part of life – a part that people passed through with lots of hard work but without much drama.
Then the financial world changed. We were particularly unlucky here in Ireland in that we had already changed dramatically before the financial crises. The timing for our Celtic Tiger could not have been more unfortunate for it catapulted hundreds of thousands of people into immediate and painful Debt (now spelt with a capital D).
Let’s consider the Celtic Tiger briefly for a moment. When I left Ireland in 1987 I was a very proud Irishwoman. Ireland was seen as a shining example of how a small, modern economy could create great wealth despite a scarcity of natural resources, no manufacturing base and a tiny population. We were doing it again – taking our place on a world stage out of all proportion to our global importance. It was a triumph of spirit over adversity. In fact, it seemed that our very history had somehow conspired to take our difficult path to sovereignty and use it as a lever to leapfrog us to greatness. Since the crash, we have forgotten that it was our natural talents that created the Celtic Tiger, not the property bubble – that came afterwards. The property bubble was the symptom of our success not the engine.
So even as we were creating real wealth, developing new businesses and becoming an intellectual powerhouse in Europe, things were changing and property became the outward symbol of our success and ultimately as we all know, the bubble that ‘did us in.’
There are some thoughts on debt that I want to share, thoughts on debt before it became Debt.
When the financial crisis deepened, so too language changed around debt. Terms should as debt forgiveness, debt cleansing and moral hazard began to be part of the conversation, only these terms were being generated by the financial industry and used a weapon against ordinary people. If you were a developer or a banker, you could argue for business negotiation but if you were an individual, you had to ask for debt forgiveness. Not only was the little person the lowly supplicant, the bank held all the cards. Debt forgiveness wasn’t a right, it was a gift at the behest of the banks. Not only was the language changing, overnight the rules changed. The banks went from the position of throwing money at people with the loosest of terms, to become predatory institutions capable and ready to act in the letter of the law. Once the financial crisis gathered pace, people were set up to fail.
Of course, at this stage, naysayers are all pointing out that people did not have to borrow the money. That is was their choice. That they have nobody to blame but themselves. That people were greedy.
Let me try and give you another perspective. For starters, had we not hit the financial crisis, those ‘greedy’ people might very well have succeeded and their decisions viewed as sound commercial actions and lauded for their success. There is a very fine line when judging someone’s debt. Move the needle on the time dial backwards a few years and the general conversation might be very different.
Then someone’s greed may be another person’s desire to better themselves; to provide a college education for their children, to grow a business or to provide a pension for old age. Human beings are infinite and diverse. Greed alone is too blunt a term to apply to borrowing. However, greed is a very apt word to apply to banks whose sole function is to make money and moreover to make money in the short term.
Language is a very important indicator of what is happening in this debate and despite the soaring levels of anger in this country – against the banks, against the defaulters, against the bondholders, against the government – it is being used most effectively by the establishment. Language is being used to shame people in Debt. For some reason, Debt has become a moral issue, an ethical issue. Let me state very clearly here that language is a very powerful weapon in the armoury of the banks. Debt is not a moral issue, debt is a business condition.
I met someone recently who said to me: I was brought up to repay my debts. The comment sunk in and I realised the chilling implication was that somehow, as a bankrupt, I had been brought up not to pay my debts. I was shocked. Prior to my financial collapse, I had not so much as a library fine, a parking ticket or an unpaid debt of any kind. I had been brought up to repay my debts in common with the 300,000 Irish families now in mortgage arrears. So what had changed? Had we (as in those of us in financial distress) suddenly changed our moral perspective, our ethics? How had this happened to not just one person but to thousands of people overnight? Of course, the answer is not that people’s ethics had suddenly morphed into those of the artful dodger, but the recession combined with changing rules forced people into untenable positions, positions that can count their cost in blood. Now, that to me is a moral issue – that Debt can be the catalyst for suicide. Now with this understanding, we can rightly use the language of the bible to challenge this condition.
Let us consider why banks can shame people, even onto the ultimate tragedy of suicide, and yet the blame remains with the person. Now, that to me is both a moral and an ethical issue. How can do they do this? By a combination of complicated guile and extreme arrogance is how.
One of the key weapons on the side of the banks is the complete lack of transparency. IBM sales men of old used the FUD argument to sell their product; fear, uncertainty and doubt. Banks are the ultimate purveyors of such confusion. It allows them to control the rules, change the rules and keep the solvent fighting the insolvent. Consider how you get into debt? It is very easy. There are algorithms based on salary, age, health and the asset you want to buy. Of course, you can shop around but the amount you can borrow is pretty transparent. So, why can’t the getting out of debt be so simple?
Right now, the new insolvency laws are cumbersome, clumsy and frankly do not work. So far only four people have successfully navigated the Insolvency Service, four in total. The banks have the veto and are in charge. I know for had the banks not vetoed the sale of my home in 2011, I might not be here. I might not bankrupt. I might not be writing articles about debt. I might not be running for Europe and instead be home minding my own business. But history cannot be unwritten and so I was bowled down to the Insolvency Service only to be told I was too broke and as a last resort I was forced to go bankrupt. I have spoken with PIPs up and down the country and they are all advising their clients NOT to work for the duration of the bankruptcy, for three years. How dysfunctional is that? I am resigned to the fact that I have lost my home, my life savings and all my possessions – but I will fight for the right to work for my future and that of my children’s future.
If we had transparency, then we could see how to get out of debt. Another important point to remember about the banks is that when they lend money they charge interest. This is not a charitable action on their part and the interest is the benefit they get for the risk involved. Only, they are currently safeguarded in the country and have little or no risk. Most of the money they lent has already been paid for in terms of cost. It is an accounting exercise – paid for by the interest they charge. But let us have transparency on how to get out of debt. No more hidden deals, no more who you know and no more how much money you have to pay expensive professionals. Just transparent laws and steps to exit Debt. It is a business issue you know.
I met another woman on the door step who listened to what I had to say about debt and Debt. I watched her face throughout my monologue and it was unsmiling. At the end, I put out my hand and touched her elbow. ‘You don’t like what I am saying,’ I said. She nodded. She did not agree at all. She had worked hard all her life. She and her husband had made a decision not to have foreign holidays for ten years in order to send their children to college on very modest borrowings. Now she felt angry that people, people such as myself, might be able to escape debt. I nodded and fully understood. I totally got her perspective and empathised with her.
But while I felt for her, I also wanted to talk to her about the society we live in, that our children grow up in. If the banks put people onto the street, aside from the human carnage, it costs the State, and the taxpayer more. If the banks are allowed harass and bully people, then we create an oppressed society where joy and laughter are absent, where children grow up surrounded by silent and shamed parents, where the only answer is emigration, where we put back the progress of our nation by decades.
While it takes two to tango, when the music stops, it unfair to only have one chair for the banks.
Let’s give ordinary people a fair crack of the whip. Let’s stop vilifying people in Debt; it is only money after all. Let’s recognise that debt is a business issue with a small ‘d’. Let’s introduce fair ways of exiting unsustainable debt (the same rules to apply to the insolvent as well as to the rich), Let’s be kind to one another, stop doing the banks’ work for them, and insist on parity of risk. Let’s be a country that can be proud once more and look our neighbour in the eye once again.
Above all, let’s cherish our people, let’s stand up to Europe, let us be a proud nation once again.
Send me to Europe
I am also making a documentary to explore the hidden story of modern Ireland. Called An Uncomfortable Truth, this is the documentary that they didn’t want made. This is the story they wanted to bury. This is the truth that no one in Europe wanted to admit. This is the story of Modern Ireland. This is the story of Ireland in Austerity – the real story.
The Ireland that did not rebel, the Ireland that did not overthrow its corrupt leaders, the Ireland that did not eject its politicians – but the Ireland that is suffering daily, the Ireland that has 40 times more debt per capita than any other Euro Nation, the Ireland who has pushed debt on its children’s children and the Ireland that was sold a pup for Europe – holding 42 percent of ALL euro debt. They didn’t want to know but we are going to tell them anyway.