Friday 28 October 2016

Shane Ross: Troika may be leaving, but they'll never really go away

Published 10/11/2013 | 21:30

I WILL miss the troika. Every quarter, all the weird and wonderful members of the Technical Group have been given an audience with those who have run Ireland's economy. The meetings have not been particularly productive, but they have produced moments of light entertainment. I will never forget the shock on their faces when Joe Higgins opened up on them, all guns blazing, with his revolutionary doctrine.

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We met them for the last time 10 days ago. We said goodbye. Or so we thought.

Unfortunately, we have been brainwashed. Last week, Public Expenditure minister Brendan Howlin described their departure as a "red letter day". Taoiseach Enda Kenny and Michael Noonan have been busy briefing the media about how we are finally taking the responsibility back into our own hands. The restoration of our economic sovereignty is being spun as done and dusted.

December 15, the widely anticipated moment of their departure, has been heralded as Victory Day.

Will it be the end of austerity? Will the next Budget be expansionist? Now that the whipping boys are gone, will we be able to loosen the purse strings?

Nothing will change. The troika will remain anxious creditors. They will be watching us like hawks to ensure that we are meeting our deficit targets. At our last meeting they revealed that they would be back in Dublin, in their constituent parts, almost as frequently.

Creditors are ever vigilant, guarding their loans. External "fiscal surveillance" is the latest jargon for the latest European control of our economic policies. The IMF and the European Commission will never leave us alone, free to repeat the mistakes of the Celtic Tiger.

Nor will the bond markets. The Government has boasted about our return to the coldest, most demanding disciplinarians on God's earth. The bond markets will lend us money for as long as the crucifixion continues. Bond markets love to see pain being inflicted on ordinary people. As long as fiscal targets remain more important than humanity, they will lend us money.

The troika made it crystal clear that they were not leaving an economic paradise behind them. They reported progress, but waved warning flags about structural problems – not only in the legal profession, or in the jobless numbers, but, more fearsomely, in the banks. The troika know that our mortgage arrears deception could sink us. They know that we are in danger of failing next year's stress tests. They know that a crisis recapitalisation threatens. They are exiting, leaving these unexploded grenades ticking in our midst.

Let us hope that the bond markets missed the words of Nobel economist Joseph Stiglitz on his visit to us last week. He was far from upbeat. He was bearish about the banks; he was bearish about Europe; he was bearish about Ireland. Ominously, he warned that where "Europe goes Ireland goes", adding that the "prospects for Europe are not great". He was bearish about our growth, not believing official predictions that we will grow by 2 per cent next year.

The cut in the ECB rate to 0.25 per cent last Thursday signalled near panic about the European economy. The reduction is welcome relief for tracker mortgage borrowers , but figures earlier in the week showed that the European economy was stagnating. Inflation was down to 0.7 per cent, way below the target rate of 2 per cent. If we do not meet our own growth targets, the supposed security of the bond markets could turn into a nightmare. They will provide cold comfort. We could even be shut out. That is why the Government is considering a new credit line.

The Troika hasn't gone away, you know.

Sunday Independent

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