EDITORIAL : THE INDENDENT, IRELAND

          

 

So far, so good, but we must keep going

THERE is no hard and fast rule on how long honeymoons should last. A lifetime, say romantics: until the journey home, said the cynical old cartoon character Andy Capp. It is never a lifetime for governments.

Experience shows the best they can hope for is a mid-term crisis followed by recovery which might give victory in the next election. But the general view is that it is a bad sign if a new government's popularity does not last at least 100 days.

To judge from today's Irish Independent opinion poll, the Fine Gael/Labour coalition government has passed that test. The honeymoon is still on. The larger party has gained since the election and the once-derided Enda Kenny has the approval of a remarkable two-thirds of the electorate. What this means for both government and public, is difficult to say.

The 100-day business took on a life of its own, but it is largely irrelevant for a government with a five-year term and a large majority. It is more significant that the failure to "burn" bank bondholders or get a cut in the bailout interest rate has not damaged the Government's popularity, despite the tide of anger washing across the airwaves and pages on these topics.

People are happy to have a fresh government after the burnt-out husk which the Fianna Fail administration became. Mr Kenny has surprised almost everyone by the air of authority he has acquired as Taoiseach, both inside and outside the Dail. A few misspeaks aside, the coalition's communications strategy has been sharp.

The question is what will happen when the novelty wares off and the stern realities of fixing the public finances re-emerge. That will happen as the 2012 Budget emerges over the next few months.

Yesterday, Public Expenditure & Reform Minister Brendan Howlin stressed the need to involve the public in the austerity. He is probably right that people realise that great painful changes must come, and may be right that they will go along with them if they understand what is being done and see it as fair. That is why the soothing 100-day speeches of Mr Kenny and Tanaiste Eamon Gilmore are a cause for concern. It may be popular to suggest that incomes will be protected -- without actually saying so -- but it risks even greater unpopularity to raise expectations which cannot be met.

This government, more than most, should pay no attention to its popularity. If it delivers the necessary corrections and reforms there will be tears and tantrums along the way, but it has every chance of being rewarded in the far-off days of 2016. The party which needs to worry, and whose options are virtually non-existent, is Fianna Fail.

Mortgage market goes back to the 1970s

While statistics on unemployment and the national debt suggest Ireland is mired back in the 1980s, forecasts for mortgage applications this year -- at a pitiful 11,000 -- suggest Ireland is dealing with an economic backdrop not seen since the early 1970s.

Of course, statistics are by their nature selective and the actual size of our economy these days is nothing like that of the 1970s, but clearly the housing market is still suffering a painful re-adjustment.

The reasons for this are varied. Higher interest rates, lack of demand, lack of credit and, of course, unemployment among young people, who usually provide the backbone of the first-time buyer market.

While the banks claim to be open for business, they are often seeking deposits that potential borrowers don't have. The borrowers themselves are reluctant to buy based on the belief that prices will drop even further. This deflationary spiral is going to be hard to break.

However, what the Government can do is make sure the state-owned banks are actually lending to home buyers to the fullest extent possible. The banks have benefitted from generous capital injections from the State and it is incumbent on them to find a way to service the needs of homebuyers.