Boomerang_ Travels in the New Third World - Michael D. Lewis [40]
THIS TIME KELLY sent his piece to a newspaper with a far bigger circulation, the Irish Independent. The Independent’s editor wrote back to say he found the article offensive and wouldn’t publish it. Kelly next turned to the Sunday Business Post, but the editor just sat on the piece. The journalists were following the bankers’ lead and conflating a positive outlook on real estate prices with a love of country and a commitment to Team Ireland. (“They’d all use this same phrase, ‘You’re either for us or against us,’” says a prominent Irish bank analyst in Dublin.) Kelly finally went back to the Irish Times, which ran his piece in September 2007.
A brief and, to Kelly’s way of thinking, pointless controversy ensued. The public relations guy at University College Dublin called the head of the Department of Economics and asked him to find someone to write a learned attack on Kelly’s piece. (The department head refused.) A senior executive at Anglo Irish Bank, Matt Moran, called to holler at him. “He went on about how ‘the real estate developers who are borrowing from us are so incredibly rich they are only borrowing from us as a favor.’ He wanted to argue but we ended up having lunch. This is Ireland, after all.” Kelly also received a flurry of worried-sounding messages from financial people in London, but of these he was dismissive. “I get the impression there’s this pool of analysts in the financial markets who spend all day sending scary e-mails to each other.” He never found out how much force his little newspaper piece exerted on the minds of people who mattered.
It wasn’t until almost exactly one year later, on September 29, 2008, that Morgan Kelly became the startled object of popular interest. The stocks of the three main Irish banks, Anglo Irish, AIB, and Bank of Ireland, had fallen by between a fifth and a half in a single trading session, and a run on Irish bank deposits had started. The Irish government was about to guarantee all the obligations of the six biggest Irish banks. The most plausible explanation for all of this was Morgan Kelly’s narrative: that the Irish economy had become a giant Ponzi scheme, and the country was effectively bankrupt. But it was so starkly at odds with the story peddled by Irish government officials and senior Irish bankers—that the banks merely had a “liquidity” problem and that Anglo Irish was “fundamentally sound”—that the two could not be reconciled. The government had a report newly thrown together by Merrill Lynch, which declared that “all of the Irish banks are profitable and well-capitalized.” The difference between the official line and Kelly’s was too vast to be split. You believed either one or the other, and up until September 2008, who was going to believe this guy holed up in his office wasting his life writing about the effects of the Little Ice Age on the English population? “I went on TV,” says Kelly. “I’ll never do it again.”
KELLY’S COLLEAGUES IN the University College economics department watched his transformation from serious academic to amusing crackpot to disturbingly prescient guru with interest. One was Colm McCarthy, who, in the Irish recession of the late 1980s, played a high-profile role in slashing government spending, and so had experienced the intersection of finance and public opinion. In McCarthy’s view the dominant narrative inside the head of the average