Quantitative easing, senior and subordinate bondholders, moral hazard, global bond markets, European Union Stability Facility, property bubbles, budget deficits of over 30% of GDP, 4 year austerity plans – we are all economists now.
Perhaps never before in living memory has money and the way the capitalist system functions been so analysed, discussed, dissected and exposed. And the more we have learnt the more horrified many have become at how the system works or, more accurately, has spectacularly failed to work.
Government in a Republic is supposed to be there ‘for the people and by the people’. The government is meant to govern for the good of all citizens. Yet successive Fianna Fail governments have failed to rule for the common good, but have been actively complicit in facilitating a small network of elite politicians, bankers and property developers to devastate the economy, bankrupt the banking system on an unimaginable scale and put the country in unsustainable debt for many many years to come. Politics, especially in the form of leaders like Haughey and Ahern, has betrayed the ideal of an Irish Republic.
Perhaps the greatest injustice has been how monumental amounts of private debt accrued by reckless banking practice has become public debt owned by the state (you and me). Those that took the risk to lend money to the banks (those senior and subordinate bondholders) seem to be untouchable or ‘trust in the system’ would collapse.
Meanwhile, governments like ours (and Portugal and Spain) desperately try to appease the unmerciful and unforgiving god ‘Market’ regardless of the social and human cost.
And god it is – before which propitiatory sacrifices of people’s jobs, homes, services, must be offered in order to avert its displeasure. It is sobering to see how governments are fearful of and bow before this god – they are its servants not its masters. It is as if this god is not a human creation that can be reformed and brought under control but is a deity owed unquestioned allegiance.
The current discussions agreed yesterday with the EU / IMF have saddled Ireland with more vast (and very probably unpayable) debts at high interest rates of 5.8%. I’m no economist, but from reading people who have been mostly right over the last 2 years, it looks like the upcoming brutal austerity packages will do nothing to close the annual budget deficit but just continue a downward spiral.
It is all about appeasing the markets and saving the Euro and it simply loads even more debt onto future generations while at the same time probably killing off what is left of the Irish economy with all the associated social and personal costs.
The plan is obviously unrealistic in its fanciful projections of growth over the next 3 years, in its omission to factor in the huge cost of servicing the EU/IMF loans, and in the very large millstone of the black hole of the Irish banking sector debt.
And those very same markets don’t even believe that it will work – hence the cost of Irish bonds has gone up to over 9% since the ‘rescue plan’ was published. They simply believe it is still only a matter of time until Ireland will default despite the EU and IMF.
And is it only me, or is there something deeply ironic in a free market capitalist system resulting in Ireland’s entire banking system now being virtually all in the hands of the state? We are also all socialists now.
A different response to our financial crisis is:
– a cry for justice for people who are going to pay unfairly for the actions of remote politicians, bankers and markets;
– facing up to the reality that those global investors who lent recklessly to reckless banks need to pay a price rather than Irish taxpayers who did not have anything to do with the whole affair; –
– action for radical political reform leading to a renewed Republic by the centenary of the Rising in 2016;
– support for ‘taming’ the uncontrollable god ‘Market’ and putting him in his proper place where he serves people, not the other way around.
Comments, as ever, welcome.