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Thomas Molloy: Noonan risks his words returning to haunt him

IS Michael Noonan slowly losing the plot? Yesterday, the Finance Minister made a Bertie Ahern-like attack on economists who predicted we might need a second bailout.

While not going as far Mr Ahern's infamous remarks encouraging critics to commit suicide, the Finance Minister dismissed warnings from some of the world's most influential economists as "ludicrous" and "idle" speculation.

"It is really speculation by economists who, at the start of the new year, speculate on these matters," he added in a quote that could have come straight from either Mr Ahern or George Bush.

What Mr Noonan should have said is that the immediate future is so uncertain that talking about a second bailout some time next year is a luxury we can't afford.

With signs of recession almost everywhere in Europe and nagging doubts about the future of the single currency, it seems almost extraordinary that we are arguing the toss about a hypothetical bailout.

Mr Noonan correctly said last month that any referendum on the deal that emerged from the December summit would be a referendum on our membership of the eurozone itself. With stakes like this, we will do well to stagger into 2014 with or without a bailout.

Nobody can safely predict the future at the moment, which makes it intellectually bankrupt in a bitter Tea Party sort of way to dismiss other people's views out of hand.

It is only by listening to the centre ground that we can arrive at some sort of truth. People of good will must struggle to believe that Mr Noonan genuinely expects the economy to expand by 1.3pc this year.

Mr Noonan could meanwhile accept that economists such as Nobel Prize-winner Nouriel Roubini and Harvard economist Kenneth Rogoff have a genuine interest in the future of the global financial system and are not just engaged in the sort of "idle speculation" that he appears to despise.

The most bizarre aspect of Mr Noonan's fervent denial that a second bailout is even possible is the fact that many of his cabinet colleagues, including his boss Enda Kenny, have implied that we could default unless the State secured new arrangements from creditors to repay debt.

Indeed, the Government has made the threat of default a cornerstone of all our diplomatic efforts. While always being careful to say we will repay all our debts, officials are holding behind-the-scenes talks with the European Commission about some sort of renegotiation of our debt burden and arguing that our debt repayment schedule is unsustainable. Let's hope that the IMF and European Commission officials in Dublin this week were not listening to Mr Noonan's argument.

Despite Mr Noonan's breezy dismissal of the economists who had the temerity to comment on the financial situation here, each of them made good points which he should at least consider.

A good example was the advice from Citigroup's Willem Buiter that the Government should negotiate some sort of stand-by bailout in case the present one runs out. It is absolutely essential to avoid the sort of last-minute deals that have been a feature of the crisis until now. Mr Noonan should set a firm date for re-entering the bond markets or beginning new talks on a bailout.

The Citigroup economist's sensible recommendation was followed by a Tweet from Mr Roubini, who said Ireland was heading for a double-dip recession. There are good reasons to believe that this has already happened. If the economy performs as Mr Roubini predicts rather than the Department of Finance, we need to know what Mr Noonan will do.

Perhaps the most interesting intervention came from Mr Rogoff, who told an audience in Thailand yesterday that he believed Ireland was among the European nations at risk of default.

The economist, who has researched how and why countries have defaulted over the centuries, told his audience that Ireland wasn't immune to the "trauma" that is happening in Europe but also added that "most countries default long before they really couldn't pay. They choose to default. That's clearly the case with Greece today".

That last comment is a very interesting observation that Mr Noonan would do well to ponder. While there is an enormous amount of hardship in Ireland today, there are many, many pockets of comfort that could still be squeezed. Mr Rogoff's comments are a call to arms and a reminder that we could indeed avoid default but only if we change and start to eliminate waste.

Mr Noonan is in danger of being captured by the interests that run the country in their own interests. He should go back and read the manifesto that brought his party to power around 10 months ago and stop attacking people who make predictions based on years of research and analysis.

Irish Independent