Ireland truly is the land of the celebrity economist, where honest budding young economics students can look forward to a life of fame and notoriety for telling the truth upon their return from exile in 20 years time. Hopefully this will mean some Marxists joining the ever growing list of choppers and Keynesians whom we on the left have all come to love and adore/hate with mutual respect for having the balls to tell the truth.
Much is being made of Ireland’s inevitable default by International experts from Reuters, The New York Times, MaxKeiser.com, Bloomberg, CitiLondon, the infamous credit rating agencies, and most notably the FT and our own legendary celebrity Economists. Paul Sommerville is a fierce advocate of telling it as it is, and always makes good watching on the VB show-even if he is forced to repeat himself several times by the nation’s favourite cynic of an armchair socialist. One article by David McWilliams (Source 1: http://www.davidmcwilliams.ie/2011/04/25/we%E2%80%99re-being-played-for-fools ) , who despite never quite getting the full picture always offers sharp analysis of where we are at, stated that we have to default by writing down 50% of our senior guaranteed debt and upto 70% of our subordinated debt. As well as this one can see from the figures he tallied that there is 35 billion euros of unguaranteed debt which many have argued forcefully, from Vincent Browne to Constantin Gurdgiev that we should give a 100% write down. The fact that Richard Bruton and every other Government Minister and TD have no real world experience outside of politics in the area of Economics is very telling. These people always peddle the line that there’s only 16 billion euro of unguaranteed debt, but the Department of Finance-unreliable as they usually are-are not wrong in saying that we have 35 bn euro of unguaranteed banking debt. This is about 2 bn euro more than all of last year’s tax take. That just shows how idiotic the arguments of the government are. They ignore, quite conveniently, the other 19 bn euro in unguaranteed banking debt yet to be paid. How they can call a sum that is 1.4 bn euro more than last year’s deficit of 17.6 bn euro ‘irrelevant’ defies all logic. Personally, as a student of economics amongst other things, I happen to think the crass stupidity of our dear leaders is down to the fact that Irish government’s tend to be, like most ones around the world, full of careerist mandarins running departments they don’t understand. Take Biffo-a solicitor who was in charge of many different portfolio’s which had nothing to do with Law as a Minister, most notably Finance. Then we had Lendahand-a solicitor who thought that money would stay in Ireland because of an island whose vanity is psychopathic, and who heard David McWilliams say Gurantee and just used that as an excuse to bail out his party’s mates in the banks and with the NAMA slush fund. Enda Kenny is a Teacher. All three of these people inherited seats from their dead parents, which tells you why they were raised, not long after graduation. The three people running the department of Finance are mandarins who all derived from the teaching profession, again with the happy coincidence of a nice job and huge pension for when the shite hits the fan. Michael Noonan, Brendan Howlin, and Brian Hayes know nothing about economics except that they must do what the big scary ECB tells them to or else.
For an example of how stupid our government is we need only look at what two men who definitely can’t be described as your run of the mill Irish celebrity economists say about our situation and government policy in relation to the ongoing FF/FG/LAB/IMF/ECB/EU Petain-Vichy Coalition policies. Firstly, Professor Richard Portes, an American professor of Economics and founder of the Centre for Economic Research says that(Source 2:]http://www.politicalworld.org/showthread.php?t=7882 ) firstly on unguaranteed bank debt: ‘For the non guaranteed bank debt, one could just say this will not be shouldered by the state and let the banks negotiate with their creditors.’ It really is that simple, do ye see? Secondly, he goes on to ridicule of Noonan, and rightly so given the obsequiousness of our new puppet minister, ‘According to Ireland’s new Minister of Finance, “the ECB says you can’t”. With great respect, where in the world can the central bank tell the government what it can or cannot do in fiscal matters? And what authority has the ECB to do this under the treaties? Ministers ask who will pay for Irish teachers, nurses – indeed, parliamentarians and ministers – if “Europe”, including the ECB, calls back its loans. But “Europe” is not so foolish. The costs to the ECB and member states would far exceed the benefits. As Keynes once said, if you owe the bank one million, it’s your problem – if you owe them 100 billion, it’s their problem. And even if foreign financing were completely cut off, the current-account deficit is now only 2%, so adjustment should not be too difficult, and no more public servants need be sacked (or go unpaid) than currently planned. The restructuring of the Irish banking system would have to go beyond what is currently planned, but that would not be a disaster either.’
The second international expert, who again is no average Irish celebrity economist, that I will quote from is Joseph Stiglitz, who as far as capitalist Nobel Prize winners go, is fairly refreshing in his uncompromising analysis. A few weeks back in the Irish Times(Source 3: [http://www.irishtimes.com/newspaper/opinion/2011/0409/1224294304548.html) Joe said along with Michale Cragg on Government and Diktat policy and I quote: ‘With those still in office entering into international lending agreements that benefit the Irish banks and their debt holders but not necessarily the Irish citizens, fundamental questions arise about how to move forward.
Today, those fundamentals that created the Celtic Tiger are still there, but the real resources, the most important of which are its people, are increasingly sitting idle. Unless the right policies are put into place, matters are likely to get worse.’ He went on to call the EU-IMF-ECB diktat a ‘noose’ to Ireland, and rightly so. The thing that strikes me is that the government and their cheerleaders(most notably Garret Fitzgerald, who like Richard Bruton and Alan Dukes is another FG economist with little life experience outside of politics, and the Sunday Independent, which is Gene Kerrigan apart, an establishment rag) have all shut up about celebrity economists being wrong as undeniably, the international experts have backed up the celebrity experts in force. Even Brian Lenihan realizes how stupid and wrong he and his successor and predecessors have been and is now trying to race into the Morgan Kelly camp(Source 4: http://www.politicalworld.org/showthread.php?t=7851 ). All of this undeniably puts to bed the fact that politicians(especially but not exclusively in Ireland) who enter public life too early know anything about economics.
So, what of the Marxists? Well there are no Marxist celebrity economists in Ireland yet. My Economics lecturer stated last year, a diehard Marxist to the last, that as far as he and others can make out that the guarantee and the NAMA slush fund were just based on some shady deal with the Government’s mates, because in the World of Marxism or Capitalism, Ireland makes no sense. We are an imperialist society, not dictated by the right and left but by a vichy Government. Our only hope, for the next 2 years until we default most probably in chaos due to the Government’s fiddling, is from the referendum campaign a small honest opposition of SF/ULA and colorful left and right independents who are rightfully lambasting this government for their collaboration with the troika and FF.
The ULA are the ones championing such a campaign. As much hope as they undoubtedly give me, they haven’t exactly got down to the required detail yet. However, they and the right are in agreement on one thing. Not only is a major banking default(of the 100% variety) most likely, it will happen disorderly due to this government’s and the last one’s supreme idiocy. Indeed, Professor Portes in the same article given above, goes on to say that sovereign debt MUST now be restructured. The ULA predicted it entirely right before the election ( Source 5: http://www.irishtimes.com/newspaper/ireland/2011/0308/1224291590826.html ) THE FINE Gael-Labour coalition will be “as despised” in time as the outgoing Government, according to Socialist Party TD Joe Higgins. He said yesterday the incoming government would implement “the programme essentially of the bondholders and bankers as represented by the EU-IMF”’ The ULA knew, and rightly so, that there was no difference. Joe Higgins is now being quoted by Max Keiser of all people (Source 6, watch on youtube.com) that most famous of all diehard capitalist journalists and traders.
It’s a funny auld world where Marxists and capitalists agree on the need for default on the sovereign and the banking debt. It’s even funnier that they come together to demand a referendum for the people. Personally, the only hope I see in the medium term-because this government will not last 2 years-is a ULA government led by Joe Higgins with possibly SF if miniscule differences like accessing markets and Gerry Adam’s leadership can be resolved. Oh and I agree with Max K-we should bring back the guillotine. Heads must roll. The reality is this: Our economy owes almost 250 bn euro of national debt under the guarantee, another 35 bn euro of banking debt not required even in the diktat, is being forced on us by the fools in office and Frankfurt. We have 260 bn euro of private sector debt. Our economy generates 160 bn euro atm. 1’000 people are leaving a week and the so called booming ‘export sector’ creates very few jobs in Ireland as well as the fact that when China, Canada and Australia crash very soon, our exports will suffer very badly. Ireland cannot afford any of this debt and we will default, orderly or disorderly- the latter of which the troika and the Govt. are hell bent on ensuring to preserve themselves. As one young economist told me recently ‘technically we have already defaulted. The problem is the Europeans insist on paying all their and our banking debts and us picking up the tab, and our politicians insist on letting them’. Watch this space – it’s early days yet.