Dec 2010

Budget day

At 10:40 this morning, it was announced that “EU finance ministers have formally approved the €85bn rescue package for Ireland along with its terms and conditions”. Brace yourself for a shitstorm, Ireland. And to the rest of Europe I say… “witness your future”.

It’s starting to look like a fait accompli. Barring either a popular revolution or a massive swing to the left parties (Sinn Féin or The United Left Alliance) in the New Year election, the Irish people are to be saddled with a huge debt they did not run up.

It’s like a nightmare from the 1980s. Like nobody’s learnt the lessons of the failed IMF interventions, the Long Depressions and deprivation, the political extremism and social fragmentation. Imposing these kinds of policies in the face of an ongoing global recession is utter madness. I’ve heard all the conspiracy theories about why the institutions of global capitalism would want to provoke this kind of economic collapse… but none of them convince me. They require too much vision from people we know have none. They require a level of organisation from the political elite that their overt incompetence precludes.

Later this afternoon, the government will reveal what is widely expected to be the most draconian budget in the history of the nation. The minimum wage will be slashed by almost 15%, welfare payments will be cut to the bone and the public sector is likely to be gutted. Meanwhile individual taxation will rise, but tax on corporate profits will not. Beyond that, what few state assets that were not privatised during the boom years will be flogged off — probably to the same international financial institutions that created the massive debt now being transferred to the Irish taxpayer.

And it’s all so bloody unnecessary. Yes, the Irish government needs to balance the books. We are spending more than we’re earning and that’s unsustainable. But the idea that the best way to balance the books is to dump a hundred billion euro of private debt onto the state is beyond insane (and there are sensible people suggesting the 85 billion could turn into as much as 220 billion before this whole thing is over). It’s free market ideology run riot.

And what’s more, it’s clearly not going to work. Ireland couldn’t generate that sort of income even in a global environment of massive economic growth. So, with the spectre of energy shortages looming ever closer and the consequent global depression, we’re out of the realm of extreme optimism and into sheer delusion.

Which is why the “bail out” and today’s savage budget are unnecessary. Ireland will default on this debt. Anyone who suggests otherwise (I’m looking at you, The Government) is a blithering idiot. We will default on the debt the markets have saddled us with, and possibly withdraw from the single currency.

The only choice we have is the manner in which we do this. We can do it now while we still have some assets and a cash reserve. Or we can delay it for a few years by delivering those remaining assets into the hands of global capitalism. Our leaders have chosen the second option and have thereby guaranteed themselves a place in history alongside Quisling, Pétain and other collaborators with external tyrants. The conditions of the bail out, for example, include transferring our last remaining cash reserve — the national pension reserve fund — into the banks, so that the banks can repay the bondholders. It’s criminal, and those responsible will not fare well in the long term.

I’ll write some more about this over the next couple of days once I’ve heard the budget and digested the implications.

Let me conclude with a short video. Although it’s a speech from a US senator and deals specifically with US policy, it resonates far beyond. And it should be required viewing for those about to open our doors to the rapacious hyenas of international finance.

Posted in: Opinion