Wednesday 28 September 2016

Snatching defeat from the jaws of defeat

Enda stands up for the bondholders and puts Magdalene women in their place. What a guy, writes Gene Kerrigan

Published 10/02/2013 | 04:00

In all fairness, you've got to admire Enda Kenny. When it comes to bankers, bondholders and "our external partners" in the EU, he might be a bit of a crawler. But he sure as hell stood up to those Magdalene Laundry women. No apology, no compensation – my God, ladies, do you think we're made of money?

  • Go To

In the face of the horrors inflicted on those people, Enda didn't flinch. He reminded them that the old Ireland was a harsh place. Life was no bed of roses for anyone. But if the State was to admit liability because it bowed and scraped to the bishops while Ireland's cast-off citizens were subjected to slave labour, well, this Government isn't going to squander the taxpayers' money willy-nilly.

Enda might be piling insult onto the injury done to the women but that's just because he wants to protect the public purse. We can't afford to pay these women the wages stolen from them, the pensions denied them – we'd have to borrow that money.

And, that, says Official Ireland, would place an intolerable financial burden on our children. And our children's children.

It's been a momentous week. One moment, Enda is shouldering the Magdalene women into a ditch, the next he's doing a lap of honour, having reached a final agreement on how we'll pay the private debts of Europe's bankers and bondholders.

Our leaders (Fianna Fail, Greens, Fine Gael and Labour) have between them accepted that Irish citizens should pay tens of billions of public money to give private sector gamblers the cash they would have got if their gambles hadn't gone belly-up.

However, it had become obvious, even to the hawks of the European Central Bank, that coercing tens of billions out of Irish citizens was dangerous. The Irish economy could collapse under that weight, triggering an EU crisis – and the debt wouldn't get paid.

That problem had to be fixed. Luckily for the ECB, it wasn't a question of whether we'd pay the debts run up by others, but how.

Enda Kenny had demanded that the burden of debt on Irish citizens should not be lifted or even reduced. It is the proud fate of this nation to pay whatever is demanded of us, even if the debts aren't ours. "We are," Enda stated, "not going to have the name 'defaulter' written across our foreheads. We will pay our way, we have never looked for a debt write-down."

It's one thing to deny financial liability for what was done to the Magdalene women. But by God, you can't disrespect the likes of Mario Draghi, who runs the ECB. Mario, King of the Bankers, who spent much of the reckless boom as managing director of Goldman Sachs, is a man of stature. There must be no resistance to the ECB as it fights for the welfare of bankers and bondholders.

It was necessary to work out a mechanism that would reduce the chances of Ireland's national bankruptcy but would inflict a steady drain on the people's pockets over a period of 40 years.

Sounds like a good deal to me, said Enda.

We'll get the analysis of the experts in a moment, but first we have to watch Enda and Eamon strutting and preening, having achieved their great victory.

In the Dail on Thursday, knowing how much Anglo Irish Bank is despised, they recast the story. It became a tale of wily politicians on a quest to defeat the evil giant.

Here's Enda: "The remnants of Anglo Irish Bank and Irish Nationwide – stains on our international reputations and dents to our national pride – have now been removed from the financial and political landscape."

Eamon Gilmore chose to address the issue in military terms: "We have wiped Anglo Irish Bank off the map."

Now, what do the financial experts say?

In a piece headlined "Ireland's Bondage", the Wall Street Journal says: "The good news is that this debt restructuring will spread out the repayment burden. In exchange for that forbearance, however, the Irish Government has agreed to accept direct responsibility for the repayment of what was originally Anglo Irish's debt, so Irish taxpayers will spend the next 40 years paying for losses rung up by a failed private bank."

It reminds us that the ECB insisted on the notorious bank guarantee and says: "The lion's share of the money that the Irish Government subsequently paid out pursuant to that guarantee went out of Ireland to make whole private investors and banks elsewhere in the eurozone.

"Ireland's immediate burden has been eased by Thursday's deal, but Irish taxpayers will still spend decades paying the price demanded by the ECB at the height of the panic in 2008."

However, never mind those mad radical lefties on the WSJ. What does the Irish Times think? The newspaper that asks "Why?" published an editorial entitled "Frankfurt's Way".

It said the capitulation gains "more fiscal room for manoeuvre". It gives Enda and Eamon "a political dividend". And the task of paying other people's debts is now "if not painless, at least significantly more sustainable. And the dreaded debt default has been avoided".

This is an accurate, I think, summing up of the case for the deal. But it's somewhat lacking factually.

Debt default has not been avoided. Debt default is what this is all about. When the gamblers broke the financial system they – and their protectors in the ECB and in neo-liberal governments – decided that default was the preferred option. The banks and the bondholders defaulted on their gambling debts.

It didn't matter that this would result in chaos, they looked after themselves. And the politicians, advised by senior civil servants and very expensive consultants and with their own deep sense of deference towards bankers and bondholders, agreed to shift the debt onto us.

When the Irish Times writes of the "dreaded default" it insults those of us – and there are many, with diverse views on politics and economics – who believe that refusing to accept someone else's debts is not to be dreaded. Politically, economically, legally, morally, it's the right thing to do – default right back at them.

Instead, weak, deferential leaders sought a deal – any deal. Unable to delink banking and sovereign debt, desperate to avoid paying €3bn on the promissory notes by the end of March, they now claim that this capitulation is the deal they had sought all along.

"The pain will continue," says the Irish Times editorial, and we must ensure that "Ireland sticks to its austerity programme."

What is this austere "Ireland" of which they speak? We are not all in this together. The editor who stands over these words is paid €220,000 a year. How can he suffer pain from the austerity policies he champions? All around us, lives are being crushed, real everyday pain is being inflicted and this is promoted by well-heeled politicians, media and academic types – none of whom personally suffers more than a slight inhibition on their elective spending.

Together, these people put the brakes on any attempt to extract higher taxes from their own class. This process – of which last week's manoeuvre was just one element – transfers wealth from those with little to protect those with much.

Another victory for the class warriors.

Irish Independent

Read More