Ireland Being Sacrificed for the Euro
Seven developed countries will need to borrow larger percentage of GDP than Ireland in 2011 - IMF Report. So, despite high interest rates on bonds now, our borrowing needs are well behind USA, France, Italy, Greece, Japan, Belgium, Portugal: There isn’t any talk to these higher borrowers, so clearly this is not the reality for Ireland either. The right wing economic establishment are falsely frightening us with IMF to take more cuts.
So why are bond rates so high? The reason is this: they do not believe that the government’s four year plan can be delivered. Neither does the ESRI. The EU is desperately trying to save the euro and that is why it is trying to get Ireland to do the impossible. But the markets still know it is impossible. The government should do two things: demand an extension of two years and tell the EU that this is non-negotiable; secondly, stimulate the economy which will drive up economic growth and improve our public finances over two years. The problem is that the government’s austerity plan is dashing growth prospects and that is why the government has to cut so much. Its cuts are based on low figures for economic growth. The government is shooting itself in the foot. The markets know that too. This pretence between the EU and Ireland and Ireland’s belligerence on stimulating the economy is so farcical that it is creating total pessimism and uncertainty on the bond markets. It is now amounting to economic suicide. This amounts to the same mistake the government made to try and beat the markets in 1992 by defending the Irish punt within the ERM. Eventually it had to capitulate.
The European Union is so desperate to defend the euro that the German Prime Minister is threatening to issue a warning about Irish bonds. This is naked coercion by Angela Merkel of Ireland in order to keep the euro from disintegrating. Ireland is not responsible for the failure of the stability and growth pact, it has only breached it in the past two years. Yet Ireland is being coerced in to defending the euro at the expense of its own economy. Ollie Rehn has come here to impress the EU hard line on Ireland.
Ollie Rehn or Angela Merkel will not prevent the euro from falling apart. The markets know this. The markets know that Ireland’s deadline of 2014 is impossible. They also know that a huge 14 billion austerity plan will prevent a strong recovery in Ireland and make matters worse.
It’s time for Ireland to DEMAND and extension until 2018 and not be sacrificed on to the funeral pyre of the euro at the expense of 450,000 unemployed, economic deflation and emigration running at 90,000 per year. The 1992 defence of the ERM failed and this attempt of impose the 3% deficit as a percentage of GDP by 2014 will also fail. It is also likely the euro will fail in the near future. This country cannot become the collateral damage of this process.
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Comment by: Rob Hartnett
Nov 9th 2010 at 14:11
Ireland’s failure will be caused not by the deficit but by the crushing of growth through austerity measures aimed at reducing it, but in fact making it terminal.
Cuts will produce lower spending and lower job demand leading to lower tax revenues and higher social welfare costs. Net result. Failure of austerity.
Ireland’s salvation will only come through recognising this, turning away from the economic ‘orthodoxy’ currently in vogue and switching to getting money flowing through the real economy.
Comment by: Pope Epopt
Nov 10th 2010 at 12:11
Tom - the Euro in Ireland may well be questionable. I don’t think that the alternative - a tiny Punt-Nua football to be kicked around by currency speculators - will serve us better, however.
Don’t you think the anti-Euro sentiment of ‘the markets’ have anything to do with their missing the manipulative/speculative possibilities of multiple currencies in the Eurozone?
My cynical take is that the Euro needs delinquents like Ireland to persuade ‘the markets’ to trade down the Euro, in the competitive game of currency devaluation, which seems to be the ’strategy’ du jour. Devaluation achieved without printing money - what’s not to like? If Greece and Ireland did not exist it would be necessary to invent us. It helps Germany and Eurozone exports for the Euro to be seen to be on the point of collapse.
Comment by: Pope Epopt
Nov 10th 2010 at 12:11
The anti-EU/Euro narrative is part three (at least) of a program to avoid taking the blame by our ruling class. It went/goes like this:
1) It was sheer bad luck the Lehmann Bros. collapsed when it did and sparked the financial crisis.
2) ‘Everyone’s’ greed led to us loosing the run of ourselves.
3) It’s the ECB/EU that’s forcing these policies upon us and our hands our tied, but we will continue fight our corner against the Eurocrats.
We can choose not to reinforce this sleight of hand. The state will become insolvent because FF/Glasraí chose to take on €70bn plus of private debt - without that things may just have been manageable, for the time being. If you are interested in promoting political change in this country you have to keep coming back to that central fact.