“Default is our only option” – David McWilliams at NUI Maynooth

Earlier today, Tuesday April 24th, celebrity economist David McWilliams was in NUI Maynooth to give a talk on the financial crisis. McWilliams charted the history behind the crisis, where the economy is now, and where he thinks it is heading.

David McWilliams. Wagging that 'I told you so' finger he'd been saving for so long.

David McWilliams appears the consummate professional. Charming and charismatic, with a talent for accents, he held his audience for almost an hour inside a packed John Hume 3 lecture theatre. When talking about the crisis, he charted his own personal history which he catalogued in 3 stages; Ridicule, Violent opposition and then ultimately to people saying that they agreed with him all along. McWilliams states that on one of his early appearances on Prime Time he was laughed at by his economic peers for daring to utter that there would be no soft landing after the property bubble. As his ideas gained more traction, he was lambasted as a naysayer, and a pessimist with former Taoiseach Bertie Ahern said that if he was McWilliams, he would kill himself. As Ireland has fallen deeper and deeper into recession, with our economy constantly retracting, McWilliams says that thing have now come full circle, will people reckoning that they agreed with him all along.

McWilliams, armed with necessary jargon asserts that in order to deal with the crisis that as a nation we need to;

  1. Define our reality
  2. Do something about it
  3. Face into crisis

According to McWilliams, the middle class is broken, insofar as, over the course of the boom, they accumulate assets based on credit. These assets are now worth less than was paid for them, and that the middle class are faced with huge debts. Meaning that there is a deficit in their personal balance sheets.  Indeed he refers to the recession as a “Balance Sheet Recession”, with worthless assets on one side and debt on the other.

McWilliams uses the analogy of the ‘good room’ to contextualise the cultural attitudes of the middle class and the way in which our political leaders represent us in Europe. (The Good Room, refers to a room in a house, sometimes a grandparents house, that is set aside for use only on important occasions and is used to present a false sense of sophistication.) McWilliams states that it is this cultural belief that propels Irish people to cover up their short-comings. He says that when our leaders are meeting leaders of the ECB and IMF, they are in effect ‘going into the good room’. Instead of giving a warts and all account of the situation, like Iceland for example, they are trying to save face and put a more positive spin on things. McWilliams thinks that this will be detrimental to the political establishment. He says that if the political establishment  persist with the current financial program then they will lose the people. He says that by doing this ie living in the good room, we are failing to define our reality, and therefore cannot move on to the next step which is to do something about it. Rather the debt is being heaped on future generations.

McWilliams says that there is an ‘Us and Them’ dialogue in Germany at the moment, and that the timing of the Fiscal Compact Referendum was designed to be a boost for Angela Merkel in her bid for re-election. Unfortunately, the treaty is proving very unpopular in Europe, specifically in Holland and France. When asked from the floor whether he would be voting ‘No’, McWilliams responded almost politician like and said that he wouldn’t be one of the people who said that it wasn’t a good idea but told people to vote ‘Yes’ anyway, so yes. (He would be voting ‘No’)

McWilliams constantly used the phrase that the money was gone, and we needed to wake up and realise that. He said that default was our only option. He also forecast the break up of the euro.

Whether his premonitions come to pass or not is anybody’s guess. The likelihood of the Irish political establishment taking any of his advice is a rather more unlikely outcome.

-Leonie Delaney 

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One thought on ““Default is our only option” – David McWilliams at NUI Maynooth

  1. The last time we had the “Irish political establishment taking any of his advice” was September 2008. That doesn’t appear to have worked out too well for us.

    When he said “the only option was to default” did he specify what we should actually default on?

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