Sunday 24 February 2019

How to dismantle a financial bomb

The U2 frontman is urged to lobby the EU for debt forgiveness.
The U2 frontman is urged to lobby the EU for debt forgiveness.

Bono should forget debt relief in Africa. He should focus on debt default for Ireland. The country has accepted a bailout plan that looks as bad as the reparations Germany was forced to pay to the Allies after World War One.

Spiralling debt led to disaster in Germany and it is a well-trodden path to poverty perfected by African despots. Ireland's most famous musical frontman should start to lobby the EU for debt forgiveness and to beg the Dail to legislate a default. Default is not the radical option, it is the rational option.

When the Finance Minister insured the depositors and 100pc of the bondholders in the banking system, he boasted to the world's financial community that the citizens and the taxpayers of Ireland would pay off a €400bn bar tab taken on by 50 drunken Irish real-estate speculators. The Finance Minister baptised the citizens of Ireland with this burden by issuing a one-page press release. Bono has seen corrupt regimes all over Africa do similar things by government fiat -- a corrupt few impoverish the innocent many and the innocent pay the interest for generations. Bono should lobby the Dail to reverse this decision and Ireland should default on the banking debt.

Bono should point out that the exchequer only took €12bn in income tax in 2009. He should mention that with Irish GDP shrinking and the mortgage default rate soaring, each taxpayer is now being asked to take on a €200,000 bank guarantee and a new €42,000 IMF loan. The math won't work.

The U2 frontman has rapped debt relief with Angela Merkel before, and he needs to make her aware that Ireland's 'real-estate reparations' are similar in scope to German World War One reparations. After the Treaty of Versailles, the Weimar Republic was forced to accept debt of more than 150pc of the country's Net Social Product, a precursor measure to GNP. Later in the 1920s, after two near defaults, this burden was reduced by the Allies to 75pc of GDP. It still led to disaster. Last month it was projected that Ireland's debt would stand at 120pc of GDP and it is still growing.

It is not that Ireland can't default, it is that the Government has compounded their initial error made in the tempest of world financial Armageddon with promises that can't be kept. It will take tremendous political courage to stand up and say "I was wrong and my country can't afford my bad decisions". Bono can help the politicians through the process. The citizens and taxpayers deserve it.

Bradley M Tirpak
3 Old Burlington Street,
London

Irish Independent

Today's news headlines, directly to your inbox every morning.

Don't Miss