Brendan Keenan: Resistance is futile in face of greedy, secretive gnomes
Swift and radical action is needed to lead us out of austerity but politicians shy away from such seismic choices
WHO today remembers George Brown, economics minister and foreign secretary in the British Labour government of the Sixties, but now consigned to the junk pages of Google?
Yet Mr Brown achieved something which many far more successful characters have not. He created two (at least) famous phrases for the English language.
One was the immortal "tired and emotional" (describing his own condition) -- and the other was "gnomes of Zurich", for the operations of the money markets.
Alas for Mr Brown, the phrase is nearly always attributed to his leader, Harold Wilson, but it is well documented that Mr Brown said it after a meeting on the sterling crisis.
Sterling was eventually devalued and Mr Wilson added another phrase to the lexicon -- "the pound in your pocket". At one of the roadshows on the crisis being organised by the European Movement and the EU Commission, a speaker recalled that, when sterling was devalued, the Irish government (whose currency was linked to sterling) had not been warned in advance -- a reminder that for a small economy like ours there are no best currency options, only least bad ones.
Just as I was recalling the gnomes of Zurich, the Governor of the Central Bank, Patrick Honohan, made comments which could best be described as "gnomic utterances".
The two words are not related, and central bankers were not included among the "gnomes" -- but they are famous for gnomic utterances. Dr Honohan's were classics of their kind. Not the bit about the public sector retirements -- that was clear enough.
But who are the mysterious strangers of whom he spoke, who come to give us advice -- and of whom we should be wary?
The troika obviously, but I'm not so sure that this is who Dr Honohan had in mind. We have had any number of strangers giving us advice; some of whom indeed have interests of their own.
They include Nobel laureates, such as professors Joseph Stiglitz and Paul Krugman. We can take it that their advice is honestly given -- although one cannot assume that about the managers of funds with holdings of eurozone bonds -- but that does not make the advice any more welcome in official circles.
Professor Stiglitz described the payment of Anglo bondholders as "unconscionable", just as the latest €1.2bn payment was being made. He and Dr Krugman are adamant that the troika austerity programme cannot work.
Plenty, indeed most, domestic analysts agree with them. When Dr Honohan says that no one can be happy about the payments to bondholders, he means no one, including himself.
The question is what to do about it, and what to do about the Herculean task presented by the austerity programme? Most of the advice, both at home and abroad, is for swift, bold, radical action.
To make any sense, such action would have to include a unilateral default on debt; departure from the euro; the collapse of the banks (along with their thousands of jobs and a good deal of their deposits); the freezing of what deposits were left under guarantee; the imposition of controls on moving money abroad; and, temporarily at least, a 50 per cent reduction in public sector pay, welfare payments and subsidies.
Anything less would not have the desired effects of igniting above-trend growth and reducing the debt burden to a level which would allow a return to commercial lending.
We are told by the advocates of such policies that everyone would move on before too long, that the effects would turn out to be highly desirable, and that we would wish we had done it all sooner.
But you can see why governors of central banks are not too keen on such a course of action. And why the politicians who would have to take such seismic decisions are even less keen.
Those who sit on the opposition benches (including members of the present Government in their time) do not have to bear that responsibility, and they tend to be much more enthusiastic about great leaps forward.
I suspect that, even if they were sure it would work, most politicians would still shy away from the consequences. Of course, no matter how persuasive the arguments, nobody can be sure that the eventual benefits outweigh the horrendous costs.
That is the criterion for any set of policies. We do not yet know the costs of the convoluted, makeshift and often illogical policies of the eurozone. As with any conceivable outcome, they are bound to be horrendous -- but policy changes could still make them affordable.
We certainly do not know the eventual benefits of following the present regimen. Should the euro break up, there may not be any. In circumstances of such uncertainty, the strong temptation is to carry on as before, and see how things turn out.
Such a feeble approach could hardly even be called "advice" -- but I, for one, find the temptation hard to resist.
