There is a real danger that the Oireachtas inquiry into the banking crisis could achieve the exact opposite to what it is designed to achieve and be much, much worse than just a waste of time.

This is because the question of who or what was to blame for Ireland’s near economic collapse is crucial to whether we can escape from our apparent tendency to blow it each time Ireland looks set to enter a period of sustained economic prosperity.

The purpose of the inquiry is to inquire into the reasons why Ireland experienced a systemic banking crisis, “including the political, economic, social, cultural, financial and behavioural factors and policies” that contributed to it.

Given how over a period of just a few years a small number of banks borrowed billions abroad and stuffed it into the Irish property market, thereby creating a bubble that, when it eventually burst, left the citizenry to pick up the pieces, the establishment of the inquiry is an obvious move.

Many business owners and employees have seen their lives collapse during the bust. Families have been torn apart by the stress involved. Many people have suffered nervous and physical breakdowns.

Some have even died as a result, by their own hand or otherwise. The least we all deserve is to have the senior bankers and regulators come out and explain to us how this happened.

But the problem is that we went through a bubble in the early to mid 2000s, and it is in the nature of bubbles that people are left scratching their heads afterwards, wondering how on Earth it had happened.

Herd behaviour

In other words, the explanation for the banking crisis lies as much in such psychological phenomena as herd behaviour as it does in bankers’ boardroom minutes. Which brings us to politics.

The US economist Robert Schiller, who in his book Irrational Exuberance predicted the collapse of the dotcom bubble, is an expert on why bubbles occur.

Part of the answer, he says, lies in the optimism that builds up during a period of well-founded growth. The collective psychology that is thereby developed, continues past its sell-by date and contributes to the collective, irrational behaviour that stalks the land while the bubble is in full swing.

The convincing thing about this idea is that it fits so well with Ireland’s recent economic history.

In the early to mid 1990s the realisation dawned that for a host of valid reasons Ireland was about to enter a period of sustained economic growth.

Suddenly the challenge for a country that had been dubbed by the Economist as the poorest of the rich, was to contain expectations.

In the general election of 1997, the electorate voted for tax cuts. Domestic demand surged and by 2002, the international competitiveness of the Irish economy had been severely damaged.

The dotcom bubble burst and Ireland felt the shock waves but, from about 2003 on, the banks started borrowing money abroad and pumping it into the Irish property market.

A lot of people thought that the resultant economic growth was simply a return to what was normal.

Seen in this way it is obvious who is to blame for the banking crisis, and for the broader economic collapse – politicians and the electorate.

The problem is that Oireachtas committees, while they have done a lot of good work in the past, have never shown themselves to be particularly good at holding politicians to account.

Dirt inquiry A very good example of this was the famous Dirt inquiry, which investigated AIB’s role in facilitating tax evasion on an industrial scale.

The ministers for finance during the period concerned were pretty much left alone. Yet they, of course, were the ones who bore the ultimate responsibility.

It is ironic that the banking inquiry, which is due to publish its report in November, is taking place against a backdrop where economic observers are saying Ireland is set fair for a period of strong, sustainable economic growth, given sensible domestic political management.

The backdrop is uncannily like that of the early to mid 1990s, when the management of expectations was the primary challenge facing us.

There is also something worryingly familiar about the way the lure of populism is abroad just as the economy has turned a corner.

This is a pity, given our recent history. The challenge for the membership of the committee inquiring into the banking crisis is to provide the type of leadership that exposes populism for what it is.

Using the inquiry as part of a wider armoury aimed at winning power at all costs would, or should, be unforgiveable.