It remains one of the enduring mysteries of the post-2008 world as to why ratings agencies remain widely trusted and cited by media outlets and institutions alike. ICTU’s Macdara Doyle writes.
If any professional performed as badly as the ratings agencies did in the lead up to the crisis, it is unlikely they would ever work again in their chosen field. Never mind the public opprobrium, simple shame would be enough to see them cease trading and close up shop.
Recall that, as the financial bubble inflated out of all proportion to the economies it was supposedly attached to, the key global agencies gave triple AAA ratings to some $4.3 trillion in bonds. Less than 18 months later were forced to concede the bonds were officially worthless. More insidious was their role in inflating the value of the infamous mortgage-backed securities which spread like a virus throughout the global financial system, awaiting the signal to detonate.
But that was then and this is the post-crash world, where normal service has been resumed and executive bonuses endlessly inflate as incomes for the majority stagnate. In this maladjusted world, the ratings agencies carry on as if the past was a mere blip. Consequently, their verdicts still carry weight.
In that context, a recent pronouncement from the Moodys agency on Ireland’s housing market will have caused some discomfort in government circles. The agency cited housing as a potential concern, noted problems with the shortage (absence) of affordable accommodation and said it could take time for planned initiatives to make an impact on the housing market. In other words, it’s not working.
That verdict was delivered after four years of endlessly recycled project announcements, a torrent of official press releases, public launches and bravura predictions. Today, working people on average earnings and above are probably even further away from owning their own home than ever before.
Meanwhile the rental sector remains chaotic and unpoliced. Societies with stable healthy rental sectors across continental Europe possess two key characteristics that are absent here: security of tenure and rent certainty. That makes renting an attractive proposition, which in turn takes pressure of the wider housing market. In Ireland, low standards and poor regulation mean it is a sector you enter at your peril and escape from at the first opportunity.
Hardly surprising that Moodys concluded that our chaotic housing market could deter overseas workers and thereby damage foreign investment plans. If you cannot house your workers, why would your global corporation consider Ireland as a location for either new investment, or expansion of an existing facility?
That penny dropped in advanced capitalist and market economies many decades ago and, as a rule, they do not tend to experience recurrent housing crises. We are coming very late to this party.
Over recent months, the Irish Congress of Trade Unions has engaged in a national campaign on the housing and homeless crisis, publishing a Charter for Housing Rights. The Charter aims to address the fundamental imbalance in the sector, whereby house buyers and renters enjoy far less rights and protection than speculators, developers and landlords.
A right to housing must be established, security (sanity) brought to the rental security and inhumane and self-defeating evictions into homelessness ended. In addition, the State must retake the ground it vacated from the 1980s onwards and become a key provider of affordable public housing. That role was gifted to the market and the market has failed.
As part of the Congress campaign we have been meeting TDs at constituency level across the country, talking to them about our Charter and the need to fundamentally alter how we do housing in Ireland. Many TDs agreed, across all political parties. Now we need to transform this into reality and end this crisis once and for all.