One of Ireland's biggest trade unions warned today that the nation was on the brink of civil unrest as government officials negotiated a multibillion euro bailout for the country's ailing banks.
The Guardian, 20 November 2010
The Technical Engineering and Electrical Union said further "draconian" public sector cuts of €15bn (£13bn) over four years could lead to street disorder. It urged a campaign of civil disobedience unless the taoiseach, Brian Cowen, calls an immediate election. An emergency cabinet tomorrow will discuss the new round of cuts.
"When the measures being proposed are heaped on top of the €14.5bn cuts already implemented in the last three brutal budgets, life in Ireland will be unbearable," said the TEEU leader, Eamon Devoy. A group of 16 officials from the International Monetary Fund and European Central Bank are staying in Dublin's luxury Merrion hotel, holding talks throughout the weekend with the Irish government and Ireland's central bank. Financial sources told the Observer that a strategy could be announced as soon as Monday to stabilise Ireland's banks.
A first priority is to restore confidence and halt an outflow of cash – Anglo Irish Banks revealed on Friday that customers have withdrawn €13bn of deposits this year. Measures under consideration include hiving off rotten loans into a freestanding "bad bank".
An injection of capital into the banks could be followed by a broader sovereign bailout in the form of a multibillion euro "contingency loan" from the IMF and the ECB. Government sources said the loan would be available for Ireland to draw on if it ran out of money from the beginning of 2011. Asked about any preconditions that might be imposed, one senior source within the ruling Fianna Fail party said: "Because it's a loan that we will have to pay back, they won't be seeking anything major in return like higher corporation tax for Ireland."
Ireland's unusually low 12.5% rate of corporation tax, which has lured investment to the country by multinationals such as Google and Microsoft, is a bone of contention among European leaders. France's president, Nicolas Sarkozy, today said he expected Ireland to increase the tax.
"There are two levers to use: spending and revenues," he said at a Nato summit in Lisbon. "I cannot imagine that our Irish friends [would not use] this because they have a greater margin for manoeuvre than others, their taxes being lower than others."
Ireland's European allies fear that without swift action Ireland's debt crisis could become contagious, weakening confidence in Greece, Portugal, Spain and in the euro as a currency. William Hague, Britain's foreign secretary, expressed uncertainty about the future of the single currency – asked on the Today programme whether he felt the euro could collapse, he said: "I very much hope not. Who knows?"
David Begg, general secretary of the Irish Congress of Trade Unions, said the union movement was calling for mass protests on 27 November to "allow ordinary working people to voice their opposition to a policy that could destroy 90,000 more jobs".
The most common meme of the financial crisis in Ireland has been that "we all went a bit mad (during the boom)". This glib and trite expression is trotted out time and time again by over-paid talking heads in an effort to persuade the masses that they share, to one extent or another, part of the blame for creating the conditions that brought about the meltdown. The reality could be nothing further than the truth.
The second most commonplace meme is that of the "incompetence of politicians", which suggests the current situation came about by accident, rather than as a result of a deliberate policy of boom and bust. If it is genuine incompetence, then it beggars belief, as governments are more often than not composed of bean-counters and legal-eagles, and rarely those who actually known how to do something useful. To claim a bunch of accountants (and their lawyer buddies) are not acutely aware of the consequences of unrestrained creation of new money through lending on questionable reserves, is simply straining credibility.
No Irish politician has ever had the guts to point out that given that the money we hold in our hands is our debt, the influx of money into Ireland over the past two decades has meant an equal increase in our national debt and in the signorage owed to the ECB.
None of those offering solutions to this enormous and nation-threatening problem have named the European Central Bank's interest-bearing debt-based worthless fiat currency and the compounding effect of fractional reserve lending as the twin evils that need to be eradicated if economic recovery is ever to truly happen.
An immediate election, as called for by the TEEU, is not going to solve anything. It simply replaces on bunch of central-bank puppets with another.