Coming Out of the Economic Closet: I don’t understand what’s happening

'Shssh! I don't understand economics. Keep it to yourself'

I studied economics as a mature student. Based on exam results I had a solid understanding of the balance of payments, how to control inflation while achieving full employment and the role of supply and demand in establishing pricing. Later, working as a consultant with a good bit of time spent in the financial services sector, I came to understand contracts for differences, facilitated strategic planning events on corporate banking etc. Overall, I would have consider myself reasonably financially literate. Oh boy, was that a mistake.

Asleep at the Switch: In reality, I must have been completely asleep during those classes. Since the banking crisis emerged, I’ve read a million newspaper articles on subordinated debt, the potential issue of a European Bond, the appropriate ‘haircut’ NAMA should apply to the banks, structural alternatives to the Government guarantee and the impact that a default in Greek debt would have on the Euro zone. Now, here’s the admission. I don’t really understand any of it.

If lost, Ask: There is a stereotype of male drivers getting lost but not stopping the car to question a local. Apparently, it’s because we don’t like to lose face. Generally, I don’t mind appearing lost on any topic (it happens quite frequently). Recently, I have asked a number of ‘clever’ people to explain the banking crisis to me. Guess what? Turns out that a number of them are lost too – albeit some of them work in banking and can’t readily admit this.

I think I understand most of the individual terms and can broadly follow the logic when some particular aspect is explained. But I get completely muddled trying to understand how it all works ‘as a system’. Example: I can’t figure out if Michael Noonan’s statement about ‘burning the bondholders’ makes him a national hero or a reckless politician currying public favour. And some of the people screaming support for this policy are economic gobshites – who have no clue about what’s happening. Like a duck in a thunderstorm, they hear the noise but can’t make any sense of it. They’re just annoyed about losing money themselves (go to the back of a long queue on that one) and want to see the pain spread to others – particular to the ‘bad guys’ of the piece, the so-called German and French banks that ‘gambled and lost’. While it certainly makes good newspaper copy, I just can’t figure out if that translates into good economics.

Lost In Space: My working assumption (without being too arrogant) is that a lot of people are probably in the same boat as myself. Unless you are an economist or work in the upper echelons of finance, the nuances are hard to untangle. What we need is a better explanation of these complex issues. Someone clever enough to figure out exactly what’s happened (we have the 3 reports!) and plot the best route forward.

Fog Clearance: In the business arena, the job of a management consultant is fog clearance. You take a complex problem (e.g. a new technology is changing the dynamics in a particular marketplace) and you make it simple – easy for people to understand. You provide a clear going forward roadmap. Is it too much to ask our politicians to do the same? Perhaps they could start with the admission that some of them don’t really understand it either. Because that’s the scary part of this particular story. It’s ok to be confused. It’s when people pretend that they are not confused and go barging ahead that really worries me.

Paul Mooney


About Tandem Consulting

Paul Mooney holds a Ph.D. and a Post-Graduate Diploma in Industrial Sociology from Trinity College, along with a National Diploma in Industrial Relations (NCI). He has a post-Graduate Diploma and a Masters in Coaching from UCD. Paul, a Fellow of the Chartered Institute of Personnel and Development, is widely recognised as an expert on organisation and individual change. He began his working life as a butcher in Dublin before moving into production management. He subsequently held a number of human resource positions in Ireland and Asia - with General Electric and Sterling Drug. Between 2007 and 2010, Paul held the position of President, National College of Ireland. Paul is currently Managing Partner of Tandem Consulting, a team of senior OD and change specialists. He has run consulting assignments in 20+ countries and is the author of 12 books. Areas of expertise include: • Organisational Development/Change & conflict resolution • Leadership Development/Executive Coaching • Human Resource Management/employee engagement
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