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Wednesday 1 October 2014

John Bruton: ‘Populations are blaming austerity on bankers like people in the 17th century blamed witches’

Published 10/08/2014 | 02:30

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Former Taoiseach John Bruton has predicted that the governments of Europe and the United States will default on aspects of the welfare and health-benefit schemes for which citizens have paid social insurance.

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He also said that “credulous” people believed bankers were responsible for the financial meltdown.

Mr Bruton is a former EU Ambassador to the United States. He is now chairman of IFSC Ireland, which promotes the Irish financial services sector. In a video of a meeting in New York last year, Mr Bruton said that in the US the promises implicit in social insurance schemes such as Medicare and Medicaid would be broken.

VIDEO: JOHN BRUTON: ‘Populations are blaming austerity on bankers like people in the 17th century blamed witches’

Video of former Taoiseach John Bruton’s address at an event held in his honour by an Irish law firm in New York last year.

Scroll to 6 minutes 40 seconds to view his comments on people blaming bankers

“These promises will be broken here in the United States. The same is going to happen in Europe.”

Mr Bruton was speaking at a function held in his honour at the exclusive 21 Club in New York. It was arranged by the legal firm Matheson.

In an introduction, guests were told of his EU and US political connections, that he had met with “the President of the day and former presidents” and “had one-to-one meetings with over 250 members of Congress”.

Mr Bruton gave the gathering of about 30 lawyers and business people his thoughts on “what’s on all our minds at the moment – the global economy”.

A relaxed Mr Bruton spoke informally, without notes, about the US and EU economies and problems with the Euro. He then said, “The populations of Europe are blaming austerity on bankers, and y’know, anonymous forces like that. Almost like in the 17th century people blamed witches.” This remark caused some laughter.

“There’s a certain amount of — the mysterious quality of banking and its occult nature — and it is being blamed for things. And people are credulous, and they are inclined to believe this sort of stuff.”

Contacted by the Sunday Independent, Mr Bruton said the remark about bankers and witches was loosely worded, and as framed it was not a remark he would stand over.

He said responsibility was shared by lenders and borrowers.

He later contacted us to say he had now seen the video and that he had not said that bankers were without blame.

He said there were mistakes by bankers, and that “would have been taken as a given by the audience to whom I was speaking”.

The event was held on 13 March 2013 and Mr Bruton also spoke about protest votes in the Italian election. “I think that’s part of a sort of a... y’know, rage against the machine, sort of... eh, phenomenon in European politics,” he said.“But it’s utterly without any constructive purpose. There’s no... they have no programme for dealing with any of the problems.

“And the reality is that in Europe we’re facing a long-term problem that the monopoly that we — Europeans, and European North Americans and would-be-European Japanese — the monopoly that we had on the global economy, the grip we had up to 1990, is gone.

“We’re no longer able to control the system — people are able to compete with us, doing most of the things that we were able to do at high wages [they do] at much lower wages, all over the world. And that is changing the balance of economic power.”

Mr Bruton predicted, “We’re still going to be well off, but other people are going to get richer, and we’re going to be not getting rich as fast.”

And that, he said, “requires a whole lot of difficult adjustments”. American social insurance schemes, “Medicare and Medicaid and social security”, he said, “are completely unaffordable. And will not be afforded. And will not be deliverable. These promises will be broken here in the US. The same is going to happen in Europe.”

He said, “it’s going to happen — those promises are going to be broken.” He emphasised: “And they have to be broken. Because they can’t be afforded.”

On this issue, Mr Bruton told the Sunday Independent he based his remarks on reports from the European Commission, which examines public spending figures projected up until 2060. He said the costs were not sustainable.

VIDEO: JOHN BRUTON: ‘Populations are blaming austerity on bankers like people in the 17th century blamed witches’

Video of former Taoiseach John Bruton’s address at an event held in his honour by an Irish law firm in New York last year.

Scroll to 6 minutes 40 seconds to view his comments on people blaming bankers

Transcript

“We already had a default in Greece. We conceivably could have a default in Cyprus. And, you know, you look at Italy, how governable is Italy, look at the scale of the scale of the refinancing that the Italians have to do and the extent to which, if you like, populations in Europe are blaming austerity on bankers and anonymous forces like that… most like in the 17th century, people blamed witches for things….

(Laughter from the audience)

“There is a certain amount of the mysterious quality of banking and it’s occult nature and it is being blamed for this, and people are credible, are credulous rather, and they are inclined to believe sort of this stuff and we are seeing a little bit of that reflected in the recent results of the election in Italy, with Beppe Grillo being elected as the third party in Italy. I think as part of a sort of a, you know, rage against the machine sort of, eh, phenomenon in European politics. But it’s utterly without any constructive purpose.There is no… They have no programme for dealing with any of the problems.

“And the reality is in Europe, we are facing, we are facing a sort of a long-term problem that the monopoly that we Europeans and the European North Americans and wouldbe European Japanese, the monopoly that we had on the global economy, the grip that we had up to 1990, is gone.

“We are no longer able to control the system. People are able to compete with us doing most of the things that we were able to do at high wages, at much lower wages all over the world. And that’s just changing the balance of economic power in the world.

“And we are going to become well off but relatively poorer, if you know what I mean. We are still going to be well off, but other people are going to get richer and we are going to be not getting rich as fast.

“And that requires a whole lot of difficult adjustments ..… the financial crisis is just the working out of that in money terms but it is an underlying structural problem that we are required to resolve. And this is happening here in terms of the problem that the US is making to its own citizens in Medicare and Medicaid and social security, which are completely unaffordable and will not be afforded and will not be deliverable.These promises will be broken here in the US.

“The same is going to happen in Europe. The same is going to happen in Japan, even more so in Japan. We don’t want to face that, but it is a reality. It is going to happen. These promises are going to be broken and they have to be broken because they can’t be afforded. We’re not going to have enough people to produce the wealth to fulfil those promises.”

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