Originally published March 2014
The Financial Crash and the Irish State's Response To It
I was trying to find an analogy that might demystify High Finance for the ordinary punter ... and it came to me: punters!
Imagine if Shelbourne Park was Ireland. During the good times Shelbourne Park did really well. There was plenty of money around and everybody fancied their chances as a high-roller, backing dogs with good form and good odds, hoping to make a killing. Money was cheap so borrowing to have a flutter was easy and if you knew the right dogs you could make big money with very little risk.
Punters from far and wide, even abroad, had heard that the Irish Economy Stakes was a race with big prizes and flocked to Shelbourne to get in on the action. There were some interesting runners in the race like Big Pharma Boy, IT Lad and High Street Harry were reported to be on form having given punters good returns in previous races but the star of the show was Construction King.
For a couple of laps the dogs put on a great show, with punters placing side bets on who'd be first across the line at the end of each lap. Then coming out of the last corner, while starting to pull away from the rest of the field, Construction King suffered a massive shite haemorrage and dropped dead.
The dog's owners were stunned. Their best animal, a legend in the sport, who they had put a lot of money into breeding, training and preparing for the race was dead. They had lost every penny they'd put into him. He'd won a couple of races beforehand but they had reinvested in him and now they would never get their money back.
Then a strange thing happened.
The racecourse management, Fianna Galway Races Ltd, decided that it wasn't fair that the favourite and by far the best dog in the race was dead and his owners wouldn't win the big prize money. So they told the owners, "listen lads, we're gonna give you the prize money anyway - even though the dog croked it on the last bend and crossed the finish line in a body bag". The owners, Big Fat Developers Inc., were stunned. They couldn't believe their luck. They hadn't even asked for it but of course they were great friends with the racecourse owners as they had been bringing their dogs to the races for many years. Shelbourne Park would be flat broke but they'd look after the goose in the hope of future golden eggs.
The locals in the stands had lost a few quid on the King but hey, they thought, that's the way the cookie crumbles and sure we were only risking a week's wages and having a bit of craic ... no harm done... and sure the poor dog - it's only fair the owners get the prize money cos he was going to win anyway.
At some point the racecourse management changed from Fianna Galway Races Ltd to Blue Shirt Bandits Ltd.
The big players who had come to make their fortunes on the big race decided to come up with a plan.
The foreign punters, who had come to Ireland on the Bondholder Bus Tour, said to themselves "hey wait a minute ... if the dog technically didn't finish but has been awarded the prize money for first place then the bookies need to pay out, otherwise we're not coming back to Shelbourne Park again!" They didn't believe this would work but it wasn't going to cost them anything to have a go and bluff.
Blue Shirt Bandits Ltd decided they liked the Bondholder Bus Boys and wanted them to keep coming back to Shelbourne Park, after all they, argued, if the big players didn't come then the Park would have to close.
So they agreed to pay the Bondholder Bus Boys all their bets as if the King had won the race. The Boys pissed themselves laughing at the scam they had just pulled but they couldn't believe what happened next. Blue Shirt Bandits somehow used an unheard of process of logic and told the dogs owners and the Bondholder Boys "well actually, Construction King was such a good dog that he probably would have won all his races for the next thirty years ... so we're going to pay out on prize money for races he would have entered if he was still alive up to 2040".
The Bandits, who were actually very wealthy themselves (in fact some of them were on the Bondholder Bus) didn't want to pay out all that money using their own cash so they came up with a plan: they would charge all the people in the stands to cover the cost. All the people who had come simply to watch the races, just as spectators or maybe to stick a fiver on number 6, were handed the bill. Nobody was allowed to leave the stadium unless they had signed over their wages for the next 30 years and handed over their house-keys.
And that's what happened.
Fianna Fail guaranteed the debts of the developers who had financed the construction bubble and Fine Gael/Labour paid out on the bondholders' worthless betting slips.
... and Michael Noonan says it's too complex to explain...
The moral of this story?
While we're living in Shelbourne Park, we're all going to the dogs.
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