Austerity - How the rich suffer too


Today German Chancellor, Angela Merkel, politely rebuffed any chance of re-negotiation of the interest rates we are paying on our substantial loan from the ECB/IMF, saying that we knew what we were getting into when we took the loan. It is time to reflect on the difference that loan is making to the lives of those affected.

One picture or story can tell us all we need to know and it should bring comfort to each tax-payer now labouring under the additional losses suffered in their pay packet due to the universal social charge to see such a story.

Picture this, the story of the Kelly family.

The patriarch of the family is Paddy. He is a developer, who helped bring about the boom which brought us many developments throughout Dublin City and the country. People had jobs and houses, and offices were being provided to the people. Alas, the property bubble burst, and who could, hand on heart, see that coming.  When it did it left Paddy Kelly with debts of €350millon. In July last year, Poppa Kelly even took the noted columnist of the Irish Times, Fintan O’Toole, on a tour of his properties around Dublin in his BMW 7 series.  He’d picked up this beautiful car for €139,000 back in 2003 when the boom was loud.  But seven years later is a different time and many of Paddy’s developments could be found on the iphone app known as NAMAland

After this personal tour, things got worse for the Kelly’s.  The wily Sherriff of Dublin City noticed that Paddy was driving around this journalist in a great car and he decided to seize it against the loans that he owed.  What the Sherriff didn’t know was that this car didn’t belong to Daddy Kelly, it belonged to his wife, Maureen, or Ma Kelly.  So after embarrassingly taking the car, it was returned and Paddy gracefully didn’t bear a grudge.  However later, it transpired that Paddy had foolishly blabbed about this car in an interview to the International Herald Tribune. Ma Kelly lost the BMW in December and was forced to do her Christmas Shopping in the Mercedes.

Now spare a thought for their son, Simon, who told all in his borrow and tell book, Breakfast with Anglo.  Simon, when ‘as a computer-mad child in the 1980s, he started making spreadsheets for his father’, soon followed him into property development.  Simon has two judgments for debt registered at the high court, and owes ACC Bank €17,163,913.44.   The bank decided to enforce the judgements at the local district court in Wicklow, close to his home address at The Old Rectory, Duganstown to get him paying something off the loans.  Apparently “no payments whatsoever had been received.”

Simon Kelly is in NAMA with loans valued at €200millon, has incomings of €80,000 per year but outgoings of  €120,000 in the same year.  Simon is running to a standstill and he doesn’t even have a personal bank account in Ireland.  He has 5 children to put through school and the fees for their private education are running at €27,000 per year.  Simon is also behind in his mortgage of the Rectory on five acres of land.  He is not alone there, over 44,508 mortgages were in arrears of 90 days or more by the end of December 2010. His wife, despite owning four properties, does not have any savings. 

Simon Kelly, stated to the Judge that it was “very difficult on my income to make a meaningful difference to a €17 million debt,” and later added that he “it difficult to see how I’m being singled out.”

Judge Murrough Connellan was merciful in his judgement, acknowledging that Simon had no funds to pay back the loan at this time.  So it was an instalment order of nil.

I know Paddy lost the BMW 7 Series that he liked to tour the city with showing the monopoly board he had brought to life, but imagine how much worse it would be for the Kelly’s if the Irish state had not stepped in and borrowed the €85Billon.  Imagine how much tougher the banks would be chasing them for money, imagine how bad it would be for their property portfolios.  Imagine if Ma Kelly lost the Mercedes or Simon’s wife was forced to sell some of her 4 properties at today’s deflated prices. Imagine if the children had to be pulled out of private schools.  It does not bear thinking about.

Just remember, we are all going through this austerity together, but it’s not for nothing.  It is saving a family from a life more ordinary.