Thursday 22 February 2018

Mr Rehn, we did play by the rules

I did something this week I thought I would never do, I used the word lie when I commented on statements made by another politician. I never thought I would use that word, but I was so exasperated by the constant repetition of this lie, which in my opinion is damaging Ireland's interests that I finally said that word - lie.

The other politician in question is not Irish, in fact he is a rather studious looking, seemingly mild mannered Swede, by the name of Olli Rehn.

I am sure my use of that word did not disturb him in any way, but I just couldn't believe it when I heard his analysis of the causes of the Irish economic crisis.

Once again he trotted out the false statement that in Ireland and elsewhere, the crisis was due to a building up over decades of 'macro economic imbalances'. In plain language that means we in Ireland, were building up our debt levels over many years and when the crisis hit we collapsed.

In fact the very opposite is true. Our debt to GDP ratio, which measures our level of debt in comparison to our level of growth, was one of the most positive in the euro zone in 2007. It stood at just under 25% and was 40 percentage points better than Germany.

We also stayed within the parameters of the Stability and Growth Pact where all euro zone states had to stay within 3% of their deficit. During the 2000's Ireland never broke this pact but both Germany and France did.

What this means in effect, is that up to 2007 we kept the rules in regard to our national debt and in no way could the Irish crisis be attributed to 'macro economic imbalances'.

This of course begs the question why does he persist in telling this same story over and over again - his most recent outing, the Economic Committee meeting in the Parliament where we were discussing the role of the Troika.

Well it means that it is easy to point the finger of blame, it is easy to lump all of the different countries together and say you broke the rules, now you pay.

In case any of you think I am exaggerating, just remember the scandalously high rate of interest of almost 6% that was levied on Ireland's bailout money in the very beginning.

This was the EU Commission's way of wagging its finger and saying you were irresponsible with your debt, now you will pay a very high price for our help. It also means he can ignore the fact that it was bank debt owed to other Member State banks that finally pushed Ireland into bailout.

When he ignores that fact then there is no argument for using the European Stability Mechanism to recapitalise those banks, or indeed any other mechanism to lift some of the debt burden from the shoulders of Irish citizens.

Yes, we have to take responsibility for putting all our eggs in the housing basket and the unscrupulous dealings of our banks. These banks were of course overseen by the ECB.

So if I need to use that three letter word again when somebody else repeats this false story, I will.

Sligo Champion

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