Confidence Building Sector Facing Collapse

Dublin – It seems that every day Finance Minister Brian Lenihan wakes up to hear another piece of bad news about the Irish economy.

Today, as the economic crisis deepens and the need for an EU bailout looms ever nearer, another area of the Irish economy has come clean about the difficulties it faces: the confidence-building sector has admitted that it is grossly overvalued and is on the verge of collapse.

Confidence-building boomed after the recession.

Confidence-building boomed after the recession.

The confidence-building sector had been one of the few growth areas of the Irish economy since the crisis hit in 2008. In the face of bank losses totalling €70 billion and an ever-growing deficit between government income and expenditure, confidence building sought to plug the gap and became a major force in Irish economic parlance.

“We talked a lot about confidence back in those days,” said confidence developer Kevin Fahy, looking ruefully back at some old articles about the establishment of NAMA, which was supposed to ‘rebuild international confidence’ in the Irish economy. “It seemed like ‘confidence-building’ was the next big thing, you know? So everyone started saying it about everything we did.”

“It was like the gift that kept on giving.”

On January 19 2009, Prof. Patrick Honohan (currently governor of the Central Bank) said, “We need to have a process of confidence-building in the coherence and feasibility of the overall economic policy strategy for recovery.”

Honohan: "We need to build confidence in our incoherent and unfeasible economic strategy."

Honohan: "We need to build confidence in our incoherent and unfeasible economic strategy."

Fahy couldn’t hide his admiration. “It’s brilliant, isn’t it?” he said with a still undimmed feverish glow in his eyes. “I mean, he’s not saying we need a coherent and feasible overall economic policy strategy for recovery, because realistically we haven’t got one and couldn’t execute it if we did. But if we can give people the confidence that we have one, then things might be all right.”

“Confidence-building was where the action was at, baby!”

As the crisis deepened, confidence-building began exploding at an astonishing rate. On 14 May 2010, Brian Cowen gave a triumphant speech about Fianna Fáil’s handling of the economy at DCU, where he proudly said, “The Irish guarantee initiative was intended to give confidence to depositors and wholesale lenders so that they would continue to transact their business with Irish initiatives.”

"Markets and foreign investors are like shy teenage girls," said Fahy with the air of an accomplished paedophile.

"Markets and foreign investors are like shy teenage girls," said Fahy with the air of an accomplished paedophile.

Fahy shrugged when confronted with this bullshit, much of which he had peddled himself. “You have to understand that market analysts and foreign investment groups are just like shy teenage girls – you have to give them the confidence that everything will be all right if you want to get their knickers off, and no one does that better than Biffo.”

Such was the growth in the Irish confidence-building market that soon international investors were jumping in with both feet.

On July 14 2010, Ashoka Mody, IMF mission chief for Ireland said in an interview: “Because the consolidation had to occur during a recession, it has inevitably dampened short-term growth prospects. But that needs to be traded off with the longer term confidence-building that is very much a goal of this consolidation process. To the extent that the Irish authorities can now legitimately claim broader policy credibility, some of that confidence-building is already occurring, offsetting, in part, the short-term contractionary effects on the economy.”

But it was already apparent to those on the inside that the confidence-building sector was in the midst of a gigantic bubble. “I mean, Mody’s basically saying here that the only thing keeping the Irish economy afloat is the confidence building sector,” said Fahy, “and that just gives the game away. Then everyone was putting all their eggs in the confidence-building basket, and that had to create a bubble.”

The confidence-building sector totally collapsed in November 2010.

The confidence-building sector totally collapsed in November 2010.

The bubble burst rapidly in the autumn of 2010, however, when economist Morgan Kelly of UCD pointed out that you don’t just ‘have’ confidence, you have to have confidence in something, and that the Irish economy certainly wasn’t the in-thing to be putting one’s confidence in, as it had been holed below the waterline by the banking crisis.

“Yeah, well, he’s probably right, but he’s still a cunt for saying it,” said Fahy defensively.

Despite a last-ditch effort by Irish and foreign investors in confidence building to stave off collapse, it became obvious to all that the markets weren’t buying it any more. Soon, statements of confidence in the Irish economy, which had been worth a fortune during the confidence-building sector’s heyday, were virtually worthless.

Although the collapse left him bankrupt, Fahy remains upbeat. “Yeah, but I got a job with NAMA,” he said matter-of-factly. “They’re paying me €975 an hour for consultation, so everything should be all right for me soon.”

“Then I can get out of this economic shithole and move to the US.”



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