News Editorial

Wednesday 1 October 2014

Editorial: Deal on our bank debt should be top priority

Published 28/05/2014 | 02:30

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The removal of the so-called discretionary medical cards from sick children has just been the latest in a series of cruel and unusual blows to the people of Ireland. Picture posed. Thinkstock
The removal of the so-called discretionary medical cards from sick children has just been the latest in a series of cruel and unusual blows to the people of Ireland. Picture posed. Thinkstock

FORMER Taoiseach John Bruton has suggested we will have to continue with austerity for at least the next 10 years.

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That, he says, is a result of our approval in a referendum of the Fiscal Compact, an EU deal in which we agreed to keep within defined limits for our public spending – and for our debt. A former Minister for Finance and EU Ambassador to Washington, he is certainly well-placed to have a view – and it is our monstrous national debt that is the problem, he has suggested.

We simply need to keep paying it back to get down to the levels agreed. These may well be the rules. But they completely ignore the political reality.

The reality is that the Irish taxpayer remains crushed under the tremendous weight of the cost of paying for the debt from our bailed-out banks.

With the bank guarantee in September 2008, private bank debt became the country's public debt. The banks – largely – kept going and the euro was protected.

The reality is, the country has barely struggled on ever since, lurched into an EU-IMF bailout and series of austerity Budgets.

It is now almost two years since the famous EU communique on June 29, 2012, which suggested that the link be broken between bank debt and the nation's debts. It raised the hope that we would get help in dealing with the cost of bailing out the banks. We were a special case, we were told. After all, Ireland had helped protect the euro; we had done the Euro state some service.

The reality is that no help has come. Instead, public anger has – understandably and correctly – flared at the continued burden placed on our people in the form of savage tax increases, many of them by stealth, and savage cuts to benefits and public services.

The removal of the so-called discretionary medical cards from sick children has just been the latest in a series of cruel and unusual blows to the people of Ireland.

They have swung their support ever more behind anti-austerity candidates whose rhetoric is particularly appealing to those struggling to survive crippling economic difficulties.

We now run the risk of untried parties and Independents bringing their rhetoric into government, even as our country's economy tries to sputter back into life.

Europe needs to realise the danger this presents, and the Government – complete with a new Labour Party leader and Tanaiste – needs to refocus on the priority of getting a better deal on our bank debt. The reality is, the time has come for the end – not the extension – of austerity.

We must not fall into same property trap again

THE definition of insanity, the saying goes, is doing the same thing over and over again and expecting different results. Our property boom became a bust and a market collapse. The drop in house prices and knock-on impact on the building of homes has also created a housing crisis.

With some flickers of economic life becoming visible, many of the relics of the Celtic Tiger era are coming back into view in the property market.

The 35-year mortgage has now come back into vogue, a type of loan which during the Celtic Tiger period increased the number of people in arrears – a mortgage mess we are still trying to clean up. Carrots from the banks – like tracker mortgages and 100pc loans – can be useful for those looking to get a first home or to trade up. But we have been here before.

The Central Bank must take a firm hand and ensure that these incentives do not create new property traps – like those that have ensnared so many since the market crashed.

It has left tens of thousands with huge debts and often the wrong type of home. We simply must learn from the lessons of the past.

Irish Independent

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