Will the Irish economy ‘die’ trying to appease the god ‘Market’?

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.

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7 thoughts on “Will the Irish economy ‘die’ trying to appease the god ‘Market’?

  1. Can you tell us what radical reforms you would like to see? Leaving the EU and the euro? Banking regulation? Rules against interest on loans? Rules which prohibit the Government from running up a budget deficit?

    There appears to me no obvious political reform that would improve Ireland. Are calling for a re-write of the entire Constitution?

  2. Thanks Patrick – good to feel some righteous anger coming out. It seems to me that reform needs to be grown rather than enforced – we need a renewed vision for politics where it ceases to be a dirty word and becomes again the way in which we citizens govern our common affairs. We need to grow this by discussing, debating, planning and mobilising in pubs, coffee shops, parish halls and on-line forums where people meet to air their views and ideas for change in our society. We need to grow a movement for change. This has happened before in Ireland – witness the credit union movement, the co-operatives, the GAA. And we need people who our cowering to the market as a form of idolatry to say it loudly, clearly and repeatedly and someday someone might start to pay attention.

    • Sean, can you tell me possible 21stC equivalents to credit unions, co-ops and the GAA?

      What political parties were not culpable in the Celtic Tiger disaster, and what political parties can the Irish people now turn to? Where were the trade union leaders, if not sitting on the boards of the banks? Was there no prophetic criticism, was there no crying for justice, during the boom years?

      I agree with Patrick’s call for people to share a proper proportion of the losses. The call for justice means bringing cases against people who broke laws and contracts. So we need to see action in the courts if there is to be any worldly justice.

      But it is not possible to protect Irish taxpayers, because the only safety net in all the trouble is the State. All citizens are trustees of the State… so they need to pay their share of the burden.

  3. Dave, good questions for sure. I think the lack of obvious options is why many people seem apathetic – they just don’t see an alternative like Enda and Eamon is going to change things. I’m a wee bit more optimistic in such has been the scale of the failure of politics that a movement for reform of the political system might emerge. We need far fewer TDs (probably no Senate at all) and begin to have a political culture that can get beyond localism to acting in the national interest.

    I do hope that the decade of anniversaries coming up (1916, 1921) can act as a cataylst for a real re-think of what sort of Irish Republic we want. It has gone from a narrow Catholic nationalist one, to a wildly avaricious one (at least for the powerful) – can we imagine together a nation that values more than money and has space for an inclusive Irish identity?

    Many reforms in the banking system will be imposed from elsewhere. And yes there need to be limits put on ‘limitless capitalism’ – that seems to have caused limitless damage.

    • Doesn’t the current Constitution fulfil your imagination for a nation that values people over money and is inclusive? And your point about national interest over localism is intriguing! Was it localism that created the property bubble?

    • I love 50% of the proposals… the other 50% would be a disaster!

      Aren’t those suggested measures just an illustration of how completely messed up 21stC politics is? On the one hand, there is a call for localism, presumably to encourage people to get invovled and take responsibility… but then there is a call to ban private donations, along with numerous proposals for top down centralising controlling measures.

      We actually need back to basics political theory… not endless measures and manifestos that aren’t coherent.

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