Friday 15 November 2019

Gene Kerrigan: Transfer of power now truly complete

The policies imposed on the last coalition will continue into the foreseeable future, says Gene Kerrigan

Welcome to Occupied Ireland. We haven't been invaded, there was no siege, but after last Thursday I trust the governing arrangements are crystal clear?

In recent weeks it wasn't just the banks that were stress tested -- the robustness of our democratic structures were assessed. And we saw the result. We are free to vote for a government, but it's a puppet government, a Vichy regime.

The power lies with a handful of unelected EU mandarins, and the proconsuls they appoint to look after the details. The policies imposed on the late unlamented Biffo administration will continue -- protect the bondholders, protect the euro, try to make up the difference by cutting services, wages and jobs. The jargon we must use to describe our rulers has been specified: "Our External Partners".

On Thursday, our elected parliamentarians began to understand the limits of their power. They were allowed to, for instance, censure Michael Lowry -- though they had to pay the price of listening to the man whine incessantly about how that nasty Judge Moriarty just took it into his head to victimise poor Mick.

While this was happening, the economic and fiscal straitjacket to be imposed on the citizens for the foreseeable future was handed down to the new Minister for Finance, Michael Noonan. Billions of euros could be saved by telling the bondholders their gambles with Sean FitzPatrick and the like failed -- tough luck. It's what we were told during the election campaign. But Our External Partners warn us: Do that and we'll collapse the Irish state.

And Fianna Fail's Brian Lenihan, who bears huge responsibility for the condition we're in, proudly announced that Noonan's "speech was the same speech I would have delivered", and he was right. As this column pointed out before the election -- the EU/IMF/FF/Green government had run its course. And the country would henceforth be run by the EU/IMF/FG/Labour coalition, in the interests of the German, French, UK and Irish bankers.

Last week, the most frank statement about this country's plight came not from any of our Leinster House blowhards. It came from a man named Muhamed El-Erian, one of the world's foremost capitalists. We will deal presently with the thoughts of Muhamed, but let's first nail down the reality of The Occupation.

No one better to outline this than Professor Patrick Honohan, governor of the Central Bank. While agreeing that what is happening "doesn't score highly on fairness", Honohan pointed out that the Government will be able to continue a process of negotiation with the EU. In short, the elected politicians are free to petition Our External Partners to make minor adjustments to their orders.

As for the €70bn we're gifting the bankers (in reality, somewhat more than €100bn), Honohan says, that "returning to growth will make that affordable". He believes, "If our economy goes well, if we get back to growth, get to full employment, then we can pay this easily."

How soon will we reach full employment, then? Well, the document produced by the Central Bank and Our External Partners predicts that if things go spectacularly well unemployment will fall to a steady 5.8 per cent by 2020. (For that to happen, unemployment would have to be 13.4 per cent this year -- it's already 14.7 per cent). If things don't go so well, the Central Bank and Our External Partners predict that unemployment won't go down to 5.8 per cent until 2028.

So, we must continue the policy of feeding borrowed billions to the zombie banks, and cutting income and services, for the next nine years (all going well). Or the next 17 years (all going not so well).

And as things get better, we can relax the austerity, enjoy the fruits of our hard labour, right?

Eh, no. According to Professor Honohan, "the arrangements with our European partners could over time be restructured in such a way that we give them a bigger share of our prosperity and our growth."

In short, if we make huge sacrifices and we work very, very hard and somehow achieve a new, true economic boom, the benefits of that won't go into better hospitals and schools, higher wages, civilised services and a better standard of living. It will continue to go into paying off other people's gambling debts.

To protect the European banks that recklessly lent to reckless Irish banks, a generation of Irish people -- who weren't even aware this was going on -- is to be sacrificed.

And all this assumes that the policies imposed by Our External Partners will work. And that savagely deflating an economy will lead to growth. Last week, economist Paul Krugman pointed out that the Irish Government "tried to reassure markets by imposing savage austerity measures on ordinary citizens . . . Since then, the interest rate on Irish debt has doubled".

In downgrading Ireland on Friday, Standard and Poor's warned investors that "sovereign debt restructuring is a possible precondition to borrowing from the European Stability Mechanism." Translation: to continue borrowing for zombie banks, the State may have to default on its own debts.

From the start, those of us on the Left pleaded for attention to be given first to the real economy -- but the mantra continued, fix the banks, fix the banks. A jobs stimulus was out of the question -- we don't have any money (throw another ten billion into the oul banks, there, Patsy).

Muhamed El-Erian is the CEO of Pimco, one of the world's biggest bond investors. Connected to Oxford, Cambridge and Harvard, he served 15 years with the IMF and wrote a prizewinning book on economics. More relevant, he oversees investment strategies involving trillions of dollars. In short, he's no Joe Higgins.

Last week, El-Erian told Bloomberg: "The only people doing their fair share right now -- in fact I would say they're doing more than their fair share -- are the taxpayers of Ireland who are having to go through a tremendous austerity, and the IMF and the EU that are putting in money. Most of the creditors so far have not gone through any burden sharing. It is remarkable. It is inadvisable. It is a political decision that has been taken. It surprises me. I do not think you can sustain that political decision."

In the same interview, El-Erian warned of how inequality engenders social unrest. He's no radical, he believes the current policies of protecting the rich while screwing the citizens will lead to destabilised societies. And that's bad for his business.

Another Pimco executive, Andrew Bosomworth, was quoted in the Irish Independent on Thursday. "Ireland is closing kindergartens to pay senior bondholders -- ethically that is a very questionable policy." The ethics of our government and Our External Partners are being questioned by some of the most aggressive capitalists on the planet.

Our leaders are constitutionally obliged to hold a referendum to seek permission for any substantial change in the treaties governing our relationship with Our External Partners. That relationship has now, without consulting the people, become one of master and servant. A vote for change meant nothing. The Oireachtas has been blatantly sidelined. Ethics don't count for much these days, but if democracy means anything there's an irrefutable case for a referendum on the package imposed without mandate on the citizens.

Sunday Independent

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