Scale of the catastrophe has not hit us yet

By Vincent Browne (politico.ie)

We didn’t need Ajai Chopra, our IMF minder, to tell the junta (ie, what is left of the Government) and the mandarins that the “sensible” solution to our crisis was to inflict further misery on those already victimised by the policies of the junta and the mandarins - ie, on those who have lost their jobs.

So a twofold assault on their already immiserated condition: cut unemployment benefit to force them back to work and then cut the minimum wage so that even those who manage to get jobs are paid a pittance.

Makes sense: it saves the “taxpayers”, especially those “burdened” by having to pay 27 per cent of their income in income tax (these are the 37,000 people who earn on average more than [euro]300,000 each).

After all, these are the “wealth-creators”, people like bankers, stockbrokers, hospital consultants, quite a few GPs, quite a few dentists, quite a few lawyers, a few heads of semi-State companies; that lot.

It’s called “structural adjustment”, I think, “structural adjustment to the labour force”. Cut unemployment by forcing people back to low-paid jobs - two birds with the one vicious stone: relieve the cost of social welfare and improve competitiveness by lowering wages. Simple.

We don’t need Chopra and his chums to tell us that. Mary Harney has been singing from this hymn sheet for years and, unhappily, people have listened to her.

Fianna Fail joined in the singing in 1997 and stopped singing only recently, although I gather there are still after-hours sing-songs in places not too far away from Dail Eireann on a Tuesday or a Wednesday but, usually, not from hymn sheets.

If all Ajai was to do was to cut social welfare and the minimum wage we might be okay, or most of us might be okay - pity about the others. But there is far, far worse at hand. Far, far worse than the loss of sovereignty or humiliation or shame. It is this banks thing.

The main point of this bailout is not the bailout of Ireland but the bailout of the European Central Bank and of privately owned banks around Europe that have poured tens of billions of euro into the Irish banks.

The plan is to lend money to the Irish State to pay back some of this lending ASAP and all of it if possible. So essentially what is involved is a second bank bailout at potentially further enormous cost to this society, a cost possibly in the region of a further [euro]50 billion. Maybe a total in relation to the banks of [euro]100 billion.

We were cajoled into the September 2008 bank bailout by the EU and, in particular, by the European Central Bank, which didn’t want any bank in Europe to fail.

The total cost to the country will far exceed all the subventions we have received from the EU since we joined in 1973.

I am not implying that we should not have joined the EEC in 1973; I am merely suggesting that our gratitude for the support of the EU might be measured against the cost of the bank bailout they first urged upon us and now impose upon us.

I don’t know if this country can afford this additional debt of [euro]100 billion on top of the [euro]100 billion plus the State owes to fund itself. The interest payment on the combined debts will be in the region of [euro]10 billion a year.

Maybe the banks will show a profit at some stage and then could be sold off for some tens of billions to soften the blow. But there must now be a doubt that the banks are a basket case and are beyond rescue.

Certainly the financial markets think that, which is why nobody wants to invest in the Irish banks. Look at all the assurances we were given in relation to our banks (this is taken from the website thestory.ie):

On September 19th, 2008, Brian Lenihan said: “Our financial sector is sound and we are determined to ensure that continues”.

On the morning of the bank bailout, September 30th, 2008, he was asked: “Does this mean the Irish Government is exposed”? He replied: “No, that’s not correct”.

On December 14th, 2008, he said: “There will be no exposure to the taxpayer on this (this was the [euro]10 billion support fund for banks)”.

On February 8th, 2009, he said: “We are now going to commit an investment for a definite return to the taxpayer. This is not bailing out the banks. This is a commercial investment for the State . . .”

The scale of the catastrophe has not hit us yet and neither has the dysfunctionality of the ideology that informs our new rulers and that informed our departing rulers: that a society that inflicts the most pain on those least able to bear it is a society that has the greatest chance of success according to the perverse criteria by which they measure success.

God save Ireland.

Urgent Appeal