Wednesday 24 January 2018

Let's stick to the €3.1bn budget adjustment

Finance Minister Michael Noonan
Finance Minister Michael Noonan

The country is still bleeding money due to day-to-day spending which is increasing a debt we cannot inflate away by printing money. At a stretch, the deal can be called savings, but it's savings in the same way as "Buy this TV, it was €900 and now it's €600 save €300". There is no €300 savings, there is only €600 expenditure.

Borrowing for investment is one thing, but borrowing for day-to-day expenditure is picking up a hand grenade and pulling the pin on yourself. "Growth" that requires borrowing of €1bn a month that must be repaid later is not growth. It is an accounting trick that will crucify us later.

Burning the bondholders is not an answer. It did not happen when it should have prior to the banking guarantee and now it is sovereign debt we cannot default on without severe penalties – certainly we will not be able to borrow the money to keep paying daily expenses.

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