Time to commit, and time to act
BRIAN Cowen told the Dail last week that if the Budget is not passed next month, the Government will be able to spend only the €31bn it takes in in taxes, rather than the €50bn it currently spends, the balance made up of borrowing.
In doing so, he not only contributed to the worldwide panic about the Irish economy, but also displayed his obsession with the Croke Park Agreement, which aims to ensure that we carry on spending substantially more than we earn to maintain a bureaucracy that we cannot afford.
There has been surprise over the past two weeks that our budgetary announcements did not immediately calm the international markets. To be surprised is to misunderstand markets that are by nature erratic, avaricious and devoid of sentiment. International lenders are gamblers who make their money backing winners or betting against losers. Right now, they are dealing in bonds we have already sold in a market in which we are not operating -- and have no plans to deal in for several more months. Still, the effect of this is referred to as an Irish contagion. Why? Because international lenders don't believe we will take adequate corrective action by the time we go back in the market, so the rate will not come down to an affordable level, and then we won't be able to borrow.