Eamon Gilmore is deeply worried about the effect on the Irish people of what he called the 'Frankfurt Prescription' which is ruthlessly deflating our consumer economy in order to bring our costs down and make our exports more competitive (a laudable objective, but at what price?).
Frankfurt has despaired of our political leaders properly getting to grips with day-to-day spending on our public services, public sector pay and pensions, and social welfare.
Nearly 40 per cent of what this costs, not far off €20bn, has to be borrowed each year on top of the frightening mountain of bank debt, a burden that is crucifying our people and blighting the economy's chances of recovery.
Gilmore is passionate in his belief that "this approach won't work because it drives the economy down, you don't get spending, you don't get jobs, it takes you longer to get out of it".
His economics are those of commonsense. He knows that the Government can't create jobs, it can merely provide employment, and that we must create the economic environment in which investment and trade will flourish and real jobs will follow.
Aengus Fanning: "This country is crippled with a mountain of debt and there are two main elements, one is the catastrophic open-ended bank guarantee of 2008 which hadn't even the benefit of full Cabinet consideration. What sort of democracy is that: not only is it not discussed by the Cabinet, it is not discussed by the Oireachtas and least of all is it put before the people themselves.
"And the other big element in the debt is the current spending, where to pay for our public services, public sector pay and pensions and social welfare, we have to borrow about 40 per cent more than we actually take in taxes. My belief is that none of the main political parties are really serious about tackling that deficit because it is, I acknowledge, an extremely difficult thing to do."
Eamon Gilmore: "I first heard about that bank bailout about 6.50am on the morning of the 30th September. I got a phone call from Brian Lenihan, the Minister for Finance, and he told me the Government had made a decision to provide a guarantee for the six banking institutions. I raised some questions with him about it. I talked with Joan Burton later in the morning. We got a briefing from the Department of Finance as well. I and the Labour Party came to the conclusion that this was not a good idea. Our thinking was: If my favourite relative came to me and asked me to go guarantor at the bank for them, I would want to know a number of basic things. I would want to know what I was getting into and the extent of the debts. I would want to be able to make some calculation as to what the consequences were. The blanket guarantee was basically the Government asking us as taxpayers to provide this total guarantee for every debt in all of these six banks, without us knowing what the full extent of the debts were, without us knowing who was involved in the investments or what they were in for.
"I remember Brian Cowen telling us in the Dail this was not going to cost us anything, the banks would look after all of this. I just reckoned it couldn't work. Over time, our judgement on that has proved to be right.
"It was a bad decision because it eliminated other options that could have been explored at that time -- before the guarantee, you could negotiate with bondholders, you could eyeball them, you could take them on. But once you gave the guarantee, you effectively handed over your chips to the other side. It was a disaster and we are now paying for it. We need to make the bondholders share the burden with us, it is not right that the Irish taxpayer has to carry the entire can for all of these debts.
"The second question is the deficit and the State borrowing, and you are right, we cannot continue borrowing more than we are taking in, we have to get that deficit down and we can do that by reducing what we are spending and by raising more revenue. And the best way to raise more revenue is to get more people back to work. Everybody who is out of work is a cost of €20,000 a year between social welfare and taxes we are not getting. We have a lot of strengths in the country and the economy itself has a lot of strengths. Our exports are doing well, there is huge potential from emerging economies, if we get a bit of confidence back into the economy, if there is a change of government and people feel there is a new team on top of this and start spending again, it will give a boost to our own domestic economy."
AF: "The Labour Party has great integrity, but I would suggest that it is too intertwined with the unions to seriously tackle the problem of public spending."
EG: "The only people who will tackle it is Labour, because Labour has a credibility and authority to deal with reforms in the public service. We have that because we believe in public services in the first place. Nobody can ever accuse Labour of trying to dismantle public services or that we lack commitment to a public health system, public education and other public
services. We are coming at it with respect for the people who work in it, the vast majority of who do a good, conscientious day's work. That said, there has to be reform because it is not the quality of service we need or at the price we can afford. Some people start on this and look at the money side or how the numbers can be reduced. What we say is start with the service, what is the best and most cost-effective way to deliver that, whether it's in health or education.
"One of the things you have to do is cut out layers of bureaucracy. During the Bertie Ahern era, when a problem arose, two things were thrown at it, one was money, the other was additional staff or agencies. One of the pities over the last 14 years was that the opportunity wasn't taken during the good years to do reforms. Everything was left in place and if something new was needed, you put another layer in rather than reform."
AF: "As far as the consumer economy is concerned, we are entering our fourth year of recession and the shots are being called by the Frankfurt/Brussels axis because they don't have confidence in our ability to manage our public finances properly and we are determined that export-led growth should lead the way, but the only way we can get our costs down is by this brutal deflation of the consumer economy in which businesses are closing every day. We are brutalising our own people at the altar of a monetary dogma that was invented in Germany post the Weimar inflation and it is now being imposed on us."
EG: "And you know the worst thing about it? It won't work and it is not working. We were the first country into recession and we are the last country coming out of recession and why is that? We have already taken €20bn out of the economy in various cutbacks and that is taking money out of the domestic economy and it is creating a climate where people believe it is going to stay that way or it is going to get worse and they won't put their hands into their pockets.
"On the Frankfurt prescription -- lots of international experts have written about this -- what they say is that approach won't work because it drives the economy down, you don't get spending, you don't get jobs, it takes you longer to get out of it. The approach we are taking is more sensible, more balanced and if we have to do it over a longer period of time, we do it. We allow the economy to breathe, we allow jobs to be created, we supply credit."
AF: "What you are saying is that we are in the grip of dogma. I remember discussing this with Colm McCarthy and he said, 'really, at the end of the day, it's commonsense' and dogma pretends that there is some absolute truth."
EG: "My fear is that Ireland is being made a kind of austerity experiment. Our banks and finances are in deep trouble and the EU/IMF deal that was done before Christmas puts us into a straitjacket that won't work. And that is why we have to renegotiate this and that is the decision that individual voters are going to have to take. They have to say to themselves, if we stick with this, we are caught three ways. First, as taxpayers, who will have to foot the bills for the banks, now is that right or should the guys who invested in them be at least carrying part of the burden? The second is the interest rate -- European institutions are borrowing at one rate of interest and lending it on to us at a three per cent premium. Is that right? And the third is the budgetary straitjacket they have created for us -- you have to do your budgets over the next four years and you have to do them the way we (EU/IMF) say you have to do them.
"That is the decision we have to take on the 25th -- are we going to say 'yes Master, we will live with that'? If we do, what will happen is that our economy will not come out of recession, we will have high numbers out of work, our kids are going to have to emigrate, we will continue to pay higher rates of taxes and our services will be cut more. That is not the way to go. That is not just the leader of the Irish Labour Party saying that, there is a string of experts saying that as well."
AF: "What you are saying is the treatment is killing the patient. Why don't we kick up?"
EG: "But that is what we are doing. That is why the main economic message from the Labour Party is this has to be renegotiated. What we have to assert is that the objective is to get the Irish economy to recover."
AF: "Was that the objective of the bailout or was the objective to avoid a contagion in the eurozone?"
EG: "The objective on the night of the EU/IMF bailout was to halt the problem spreading to Portugal, Spain and Italy."
AF: "The objective was not in our national interest at all. Is it not the Government's job to look after the national interest?"
EG: "The problem that night was that the European institutions were dealing with a government that was on its last legs, that knew itself that it had lost the confidence of the Irish people.
"I know there was some criticism of some of the comments that I made in relation to this -- but what we need is the leadership of a government that will stand up for Ireland in the same way as Chancellor Merkel would stand up for Germany or President Sarkozy would stand up for France. What it does mean, of course, is that we work with our European partners, we have to negotiate these things but we need a government that is going to stand up for its people. Because what has happened with that deal is that Irish taxpayers have got screwed. Our budget is being written for us, our independence is being taken away from us. We have to come out from under that yoke. A man in Ballincollig said to me: if you give a man a job, he'll solve his own problems. If we get the country back to work, we will solve our own problems."
AF: "The Government can create jobs, it can only provide employment whereas we need investment."
EG: "What the Government can do is create the environment in which jobs can be created."
AF: "China is the great growth area, do we even have an education system where the language is taught?"
EG: "No we don't. We haven't been thinking ahead. We need a bigger presence in China and India and we need them to have a bigger presence here. The job of government is to facilitate that, get the doors opened, but also to open the doors to them to come here by easing the visa requirements, which are outdated."
AF: "What are you saying to home owners who have fallen into negative equity?"
EG: "What I am saying to them is that they won't lose their home. There is no point in saying to people we are going to give you money because we don't have it and it is not fair to start making promises like that. But what we can do is we can say to people who have difficulty, there is no reason why anybody should lose their home because of the recession. We can create a structure where the State supports people before their home is repossessed so that people can stay in their own home, the mortgage is restructured or payments deferred and the assumption under that is that things are going to get better."
AF: "Have we a tendency to wallow in our plight and indulge in an orgy of blame?
EG: "There is no doubt we are in a deep hole and there is no doubt who got us there. What we now have to do is we have to work our way out of it. The next Government has to be about leading people out of the hole that we have got into and that has to be done by getting people to work together, to pull together, to realise that some very difficult decisions are going to have to be made but we will make them fairly. It is a good country and we should not despair. The country that is going to come out of this is not going to be a country with a golden circle, or people on the inside track, it is a country where we can all share the benefit. It is like Kyran Fitzgerald -- where is our effin pride? We have to recover our self-belief and self confidence."
AF: "Real self-confidence, not the hubris of some, the hubris confined to a tiny minority of high profile."
EG: "You had a lot of them in your social pages."
AF: "Of course, people read about them."
EG: "Our objective is a government led by Labour for the first time in the history of the State. It is a three-way contest and voters have that choice on this occasion and we are going to try and persuade every individual to go for that choice.
"We also have to bear in mind that there are issues other than money and the economy. Labour is a party that has always sought to modernise this country and we have a reforming agenda -- gay people, why shouldn't they have the right to marry, we should have laws that allow for stem cell research. On the other side of it, we are a party that believes in fairness and that we will protect the weakest in our society.
"And one thing I want to nail: because Fianna Fail in particular and Fine Gael have been going around saying that Labour is a high-tax party. We have given a pledge of no increase in income tax on people under €100,000. Labour is a party that will make sensible decisions."