Monday 14 October 2019

Gene Kerrigan: Austerity doesn't work? No problem...

Destroying Ireland to save the banks, so the banks can save the country isn't working, writes Gene Kerrigan

Gene Kerrigan

Gene Kerrigan

It was a hellish year. Very little to remember fondly. Not a year we need to dwell upon. Yet, with the new year promising to be even more grim, are there lessons we might usefully remember from 2011? And what might those lessons be?

We learned, for instance, that things will be fine if we stay the course. As 2011 began, President McAleese told us she was keeping an eye out for those "green shoots of new beginnings". Later in the year, a young and rested 60, Mary headed off into the sunset, with a pension three times the salary of the average software developer.

The departing Cowen regime whooped that we were "on the road to economic recovery". Ministers of that government then retired in droves, while still relatively young, to spend more time with their vast pensions.

We learned, in short, that those who are loudest in their optimism about the current course of austerity are usually those with well-feathered nests.

We learned conclusively that the Cowen/Lenihan austerity strategy, now being implemented by Kenny/Noonan, doesn't work. This ordains that we have to destroy the country in order to save the banks, so that the banks can save the country. So, under ECB instructions, we've been feeding the bankers tens of billions; and seeking vainly to balance the books by cutting services and asset-stripping the citizens. The insane strategy of deflating an already damaged economy smothered any chance of growth. The economy contracted. Unemployment rose relentlessly.

The argument between austerity (focused on reducing deficits) and stimulus (focused on protecting jobs) has been settled. Over the past four years, austerity has turned a crisis into a catastrophe.

One of the most important lessons we learned in 2011 was this: it doesn't matter that the austerity strategy doesn't work. The Economic War Against Ourselves has the approval of the EU, the ECB, the IMF, Fine Gael, Labour, Fianna Fail and The Irish Times. This makes the strategy unimpeachably respectable and perpetually untouchable, despite its blatant failure.

You may notice that Fine Gael, Labour, Fianna Fail and The Irish Times are precisely those who cheered on the property bubble. You may notice that the EU, the ECB and the IMF benignly observed the insane gambles by German, French, UK and Irish bankers that fuelled that bubble. Among the people who matter, being repeatedly, disastrously wrong has no bad consequences.

People who oppose austerity policies are "politically motivated". The incompetent, overpaid elites who blunder onward are, on the other hand, "realists". With no political thought but peace and goodwill to all.

We learned, from the lips of ministers, that Kenny and Noonan "renegotiated" downward the profiteering interest rate we were charged for EU/IMF loans. This is simply untrue. But they continue to say it, every time they need a morale boost. Which is often.

We learned that Tim Geithner, Barack Obama's top economics guy, vetoed any suggestion that the Irish Government might demand that bank bondholders pay some of their own gambling debts.

Some weeks later, face to face with Obama, Enda Kenny chickened out of raising that matter. Face to face with Geithner, Michael Noonan also chickened out. We learned, in short, that Irish politicians are tough when they're taking money away from blind people.

We learned that politicians can be courageous and move swiftly when something matters to them. When the rules said that Richard Bruton's adviser, Ciaran Conlon, couldn't be paid more than €92,000, Bruton's boss Enda Kenny used his authority to set aside the rules and give his old mate a €35,000 rise. And then Kevin Cardiff, top lad in Finance, was rejected for a job by an EU committee. Kevin is remembered for his role in the bank guarantee, and was in charge of Finance during the €3.6bn accounting error. Politicians swarmed to his aid. Kevin was lifted into his EU job. He will get €260,000 for a job he has described as a "doddle".

We learned that democracy is dispensable. At election time, we're told to be grateful for the sacrifices that gave us the ballot. People living under dictators put their lives on the line to achieve the right to vote -- and we rightly honour them.

We learned after last February's General Election that a mandate for change is without value, when the elite collude. Promises of change are without meaning. The right to vote becomes a child's game, a trivialising simulation of democracy.

When democratically elected politicians in Italy and Greece balked at taking instructions from the ECB they were replaced by people who never received a single vote. Their successors (bankers) were chosen by unelected but extremely powerful functionaries within the ECB (bankers).

We learned that a strike of capital is not worthy of comment by politicians, academics and the austerity pundits. If bin-men withheld their labour because of an insufficient return there would be screams of "holding the country to ransom at a time of national crisis". When capital conducts an investment strike, in demand for higher returns, the otherwise garrulous have nothing to say. They instead obsess ("Crokeparkdeal!Crokeparkdeal!Crokeparkdeal!") about a minor impediment to the asset stripping.

We learned that some people can state something and then state the opposite, and retain credibility with the media. For instance, a year ago Michael Noonan fiercely condemned the FF/Green regime for throwing away tens of billions by generously paying the gambling debts of Irish, German and French bankers.

When he became minister, less than three months later, he seamlessly continued the FF/Green strategy he had denounced. This was not hypocrisy. When Noonan condemned the squandering of billions he was playing the role of a tough, angry opposition politician.

Today, Noonan has another role. He plays a shrewd, worldly-wise Minister for Finance. It's all pose, by a superb actor, but he convinces many now as he convinced many a year ago.

We learned over the past couple of weeks that it is imperative that we put the EU's "fiscal responsibility" measures into our Constitution. Noonan says we must pass such a referendum whatever the wording, or we'll be voting ourselves out of the euro. We will be no longer "at the heart of Europe" (you'll remember how voting Yes to Lisbon 2 ensured our presence within the cockles of Frau Merkel's heart?).

Some people fear that Germany wants to take control of our budgets, perhaps our economy. I don't think that's true. Something far bigger is happening.

For 30 years, a brash form of casino capitalism reigned. The old conservative capitalism (welfare state, effective regulation) had lost the argument (and anything to the left of that was old hat). Casino capitalism (markets rule, deregulate, privatise) consequently ran up trillions in debt and ruined whole countries.

Even after the failures of the past four years, with the euro collapsing, the fiscal hawks remain immovable (deficits matter, not jobs -- banks matter, not people). They want to make any further argument unconstitutional. It's a more sophisticated form of the Tea Party movement in the US, that's smothering economic recovery with "debt ceiling" laws.

Amid the ruins they have made, they hold up constitutional handcuffs and they say, "trust us".

And a happy Christmas to you, too.

Sunday Independent

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