Memo to Ireland

Again, is it down to save the nation or save the banks while it looks like the answer is the save as it ever was? - Ilene   

Memo to Ireland

"Tell the EU and IMF to Shove It!"

By MIKE WHITNEY, originally published at CounterPunch

Imagine that Yasser Arafat had succeeded in ending Israeli occupation and establishing a Palestinian state in the West Bank and Gaza. Now imagine that 10 or 15 years later, new Palestinian president, Mahmoud Abbas, agreed to hand over control of his country's budget to the IMF so his people's future would be controlled by outsiders. Do you think Palestinians would praise Abbas as a patriot or denounce him as a traitor?

Irish Prime Minister Brian Cowen is Mahmoud Abbas. He's caved in to the demands of foreign capital and transferred control over the nation's budget to the EU and the IMF. Here's an excerpt from a November 24, article in Reuters:

"Ireland's teetering government will announce plans on Wednesday to cut welfare spending sharply and raise taxes to help pay for the country's catastrophic banking crisis and meet the terms of an international bailout.

The four-year plan to save 15 billion euros is a condition for an EU/IMF rescue under negotiation for a country long feted as a model of economic development that has become the latest casualty in the euro zone's emergency ward.

Prime Minister Brian Cowen told parliament no final figure had been agreed for financial assistance, "but an amount of the order of 85 billion (euros) has been discussed.

The finance ministry said the austerity plan would be published at 1400 GMT and posted on the official government website." (Reuters)

This is a black day for Ireland. The Irish people will now face a decade or more of grinding poverty and depression thanks to their venal leaders. As soon as the ink dries on the IMF loans, the second occupation of Ireland will begin, only this time there won't be armored cars and Paramilitaries in fatigues, but nerdy-looking bureaucrats trained in the art of spreading misery. In fact, the loans haven't even been signed yet, and already IMF officials are urging the government to cut jobless benefits and the minimum wage. They're literally champing at the bit. They just can't wait to get their hands on the budget and start slashing away.

And don't believe the hype about European unity or saving Ireland. My ass. This is about bailing out the banks. The bondholders get a free ride while workers get kicked to the curb. Here's a clip from the Financial Times that spells it out in black and white:

"According to data compiled by the Bank of International Settlements, the three largest creditors to the Irish economy at the end of June...were Germany to the tune of €109bn, the UK at €100bn and France at €40bn. These sums amount to 2 per cent of France’s gross domestic product, 4.5 per cent of Germany’s GDP, and 7 per cent of British GDP."

See? Another bank bailout. Ireland is being asked to cut to social services, slash wages, renegotiate contracts, and dismantle the welfare state so that undercapitalized banks in France and Germany can get their pound of flesh. But, why? They're the ones who bought the bonds. No one put a gun to their head. They knew they could lose money if Irish banks went south. That's the risk they took. "You pays your money, and you takes your chances." Right? That's how capitalism works.

Not any more, it doesn't. Not while Cowen's in charge, at least. The Irish PM has decided to bail them out; make all the bondholders "whole again." But who made Cowen God? Who gave Cowen the right to hand over his country to the IMF?

No one. Cowen is a rogue agent kowtowing to international capital. After he finishes his work in Ireland, he'll probably join globalist Tony Blair on the French Riviera for a little hobnobbing with the tuxedo crowd.

It's revealing to watch the way Cowen works, as though the interests of foreign bankers mean more to him than those of his own people. For example, the Green Party withdrew from the government last night calling for new elections, but even though the government is in a shambles, the slippery Taoiseach wants to stay in power long enough to push through a new 4-year budget that will leave Irish workers on the brink of destitution. Who is Cowen working for anyway?

This is from the Irish Times:

"Opposition parties have today stepped up pressure on the Government as it seeks to push ahead with passing next month's budget.

Fine Gael again called for an immediate general election and said the four-year budgetary plan should only be implemented by a Government which has a proper mandate....

"What is best for the country is that the negotiation about a programme for four years be done by a government which has four years to serve, that has a mandate from the public so that it has the authority and the credibility to not only develop and negotiate it but to implement it. I think that is in Ireland's best interest," he said. ("Opposition steps up pressure", Charlie Taylor, Irish Times)

The prospective belt-tightening measures will include the firing of 28,000 public employees, a boost in property taxes, a 10 percent cut in welfare benefits, and higher taxes on low-wage workers. Cowen believes that taxing low income families is preferable to making billionaire bondholders eat their losses. The whole thing stinks to high-heaven.

Is there a way out for Ireland? Economist Mark Weisbrot thinks so. Here's what he thinks should happen:

"The European authorities and IMF can loan Ireland any funds needed in the next year or two at very low interest rates....Once these borrowing needs are guaranteed, Ireland would not have to worry about spikes in its borrowing costs like the one that provoked the current crisis....The European authorities could scrap their pro-cyclical conditions and, instead, allow for Ireland to undertake a temporary fiscal stimulus to get their economy growing again. That is the most feasible, practical alternative to continued recession.

Instead, the European authorities are trying what the IMF... calls an "internal devaluation". This is a process of shrinking the economy and creating so much unemployment that wages fall dramatically, and the Irish economy becomes more competitive internationally on the basis of lower unit labour costs."

It's all de rigeur for the IMF. It wouldn't be an IMF program unless someone was starving. That's the benchmark for success.

Ireland doesn't need structural adjustment programs that shrink GDP, dismantle popular social programs and strip wealth from workers when low interest funding and fiscal stimulus can bring the economy back to life. This is politics not economics. The EU and IMF are using the crisis to push through their own agenda. Their real goal is to crush the unions, shred the social safety net, and roll back the gains of the Progressive Era.

The Irish people are left with no choice but to resist. Presently the Cowen government is collapsing. Bravo. Now it's off to the barricades to see if the damage can be undone. Ireland needs to withdraw from the EU and start fresh. It'll be a bumpy road at first, but there's no other way. Economist Dean Baker sums it up like this in an article in The Guardian. Here's what he said:

"Even a relatively small country like Ireland has options. Specifically, they could drop out of the euro and default on their debt....Like Ireland, Argentina had also been a poster child of the neoliberal crew before it ran into difficulties.

But the IMF can turn quickly. Its austerity programme lowered GDP by almost 10% and pushed the unemployment rate well into the double digits. By the end of the 2001, it was politically impossible for the Argentine government to agree to more austerity. As a result, it broke the supposedly unbreakable link between its currency and the dollar and defaulted on its debt.

The immediate effect was to make the economy worse, but by the second half of 2002, the economy was again growing. This was the start of five and a half years of solid growth, until the world economic crisis eventually took its toll in 2009."

The Irish people didn't struggle through centuries of famine and foreign occupation so they could be debt-peons in the EU's corporate Uberstate. Like Sinn Fein president Gerry Adams said, "We don't need anyone coming in to run the place for us. We can run it ourselves." Right. Tell the EU plutocrats to take their Utopian Bankstate and shove it. 

Comments

[trav7777]

pretty succinct description.  And this is what some of us were forecasting back in 08.  Risk was being transferred to sovereigns.  Now, the international finance class will demand you sell your organs before admitting that their SYSTEM is to blame for this.

We need a complete reset, and a destruction of the banker class.

[delivered]

Just like an individual or a company, when the debt load becomes too heavy, it’s time to clean the slate and go BK. Basically what Ireland is looking at is a massive DIP (i.e., debtor in possession financing) from the ECB/EU where you simply have a prepackaged BK which then crams down significant and very difficult spending cuts on the masses (combined with tax increases). In the end, the DIP financing source calls the shots with the masses suffering and the equity holders getting wiped out. Or in other words for Ireland, the ECB/EU represents nothing more than a R&P Fund (rape and pillage) that is going to suck the life out of the country. Modern day pirates these bankers are showing absolutely no mercy as they sack one country after another.

To the Irish and the entire country, it would appear that beating the ECB/EU to the punch would be the best course of action (and while the country still can). Remember when you elect this road and tell the ECB/EU to stick it where the sun doesn't shine, you must properly plan for going BK and be prepared with ample cash/liquid resources (as everyone is going to place you on COD) along with a understanding the significant pain everyone will experience in the short-term as you move away from the Euro and fire up the old printing presses (or minting presses with your new coinage).

My son visited Ireland this summer and loved the country. I would hate to see it become nothing more than an annexed arm of the ECB/EU. Extending more debt to solve debt issues when there is no possible plan to repay the debt is simply not viable. Iceland started the process and others need to follow including Ireland. Extreme short-term pain, absolutely. The ability to ensure your next generation's freedom, priceless. Best of luck as it’s only a matter of time and pressure before we in the good old USA have to face the same music.

So back to Tyler's original point on this article. Is something really starting to come apart this weekend which should make Monday very interesting indeed? Possibly but if not Monday, then just pick another day sometime in the future as Financial Judgment Day is all but certain over the next two years.

[jakethesnake76]

DAMN i hate to see my peeps going down this path you can only stand eattin potatoes so long (i know) lol the Libs alway spend like drunkin sailors and the nice Conservatives try to come in and clean up and are also to weak to stand up to Bullies  because after all they want to be Loved too :(, when both these get thru then finally comes a dictator to get things right  telling people that he's gonna set things right and rebuild they're country . 

[williambanzai7]

[apberusdisvet]

Stormtrooper boots would have been better.

[2 cents]

Those folks that are smart enough to understand, don't have the balls to stand up to the banksters and the political traitors...

Mea culpa