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THAT BAILOUT? — 2 Comments

  1. Blaming European banks for what happened to this country is a total cop out.

    What happened to this country in 2010 when it had a government deficit of record proportions [three times worse than Greece] was due to decisions made by a small number of this country's most powerful citizens in the decade or so prior to 2009. 

    Most of the EU and euro zone countries ran their affairs during that period in such a way that they did not bankrupt their countries.

    The governments in Ireland and Greece, however, made reckless decisions over the years which eventually bankrupt both countries in 2010.

    In Ireland government voted decisions through the Oireachtas during the boom which tripled government expenditure. In our case also the financial institutions aided and abetted the bankrupting of the country by tripling bank lending.

    In addition much of the Irish media cheer led the decisions and rubbished anyone who raised questions.

    We were, therefore, liable for the consequences of the decisions of our own most powerful citizens.

    The self inflicted calamity that happened to this country in 2010 was one of the biggest disasters to hit this country since independence.

    Europe both rich and poor stood by us when that happened and when this bankrupt country needed a bailout.

    We are totally lucky we have recovered even as much as we have.

    We should, therefore, thank Europe rather than blaming them as you are doing.

    • Tony,

      I am surprised and delighted that you have seen fit to visit and comment so out of respect for you, I will answer your points in the order you have presented them. Then we can debate whether blaming European Banks is a copout or not.

      My belief is that there are several parts to Ireland’s collapse and many questions as yet unanswered about what went on. You start in 2010 but I suggest to you that from 2000 to 2008, the then Government ran a record surplus year-on-year. This is an undisputed fact. Charlie McCreevy famously said, When I have it, I spend it,” and you are right when you condemn such imprudent behavior by that coalition Government. They also ran the pensions fund promotion and the savings promotion that so many people made money from back then. My problems begin with the official line that in late 2008 we were suddenly broke and then by early 2009 we were also suddenly in deep debt. That narrative just must be wrong. Yes, the years of surplus had switched to a deficit but it should not have been a catastrophe so quickly. 

      As regards that Government, they were clearly guilty of gross mis-management and I agree with you on that point. They overheated the property market as a matter of policy, believing it would never end, while simultaneously soft balling the banks and other financial institutions. The regulators were not regulating and Bertie and the boys didn’t care. And yes, you are correct when you point out that the media cheer-led the whole shebang. But you also point out that, “In Ireland government voted decisions through the Oireachtas during the boom which tripled government expenditure,” as per Charlie above. Mind you, Fine Gael on the opposition benches criticized them for not spending enough at that time also. And today that same Fine Gael outfit are laying the seeds of another property boom but that is another article here.

      The real culprits are the banks though. Banks are private corporations and so too are central banks, the IMF and even the Federal Reserve. Governments have little or no control over them. During the 2000 to 2008 boom, all of our banks were declaring record profits and huge dividends for their investors. The perceived wisdom at the time was that bank shares were a sure thing. The majority of the voting public however received no share in these profits over many years. In reality, such profits are private and so too are any losses and that is a core rule of capitalism. Where you make a jump I can’t even see is when you state that, “We, (the ordinary citizens), were therefore liable for the consequences of the decisions of our own most powerful citizens.” The really powerful ones were, and still are, in private finance. The stroke pulled was socializing their debts and those of their investor gamblers, in contravention of the very system of capitalism that served those private club so well for so long. Those millions of private citizens who went into either necessary or unnecessary debt before the crash still owe those debts to the banks after it but the authors of the bubble and bust, the financial institutions, had their debts wiped out by those same ordinary people. That is what actually happened. 

      Certainly with the property crash, the economy faced challenges and had the banks not been bailed out, it would still have been difficult to balance the books going forward but it would have been doable without the depth of suffering imposed on all of us. Bertie’s boys were ignorant and it is ironic now to remember that they sold themselves to us as the ‘safe pair of hands.’ I, for one, will never vote Fianna Fail again after that but the true perpetrators were the banks. I explained in some detail how the continental banks were awash with savings in the mid to late nineties and how they made this available to Irish Banks in the form of loans. That was what kicked off the madness and the Central Bank turned a blind eye to it when Anglo Irish began to dabble. Far from warning bells ringing in the Dail, Bertie welcomed the development and facilitated the building boom any way he could. But it was the banks who were criminally negligent and once it started, they all dived into the honeypot with gay abandon to generate yet more private profits.

      Now we come to the so-called bailout. Our problem pre-Troika was excessive debt on our books. The Troika proposed bailout was not a grant or a gift though. It was a loan, or even more debt, so much so that they even acknowledged it could never be repaid.  If you understand the true nature of banking Tony then you know this bailout amount didn’t exist. It was brought into existence by the European Central Bank, (ECB) and the IMF. It was conjured out of nothing as banks always do because they can, but with six per cent interest added to it. All of our austerity measures and resultant misery now goes to pay that six per cent because that is the profit the ECB was always looking for. Brian Lenihan and Brian Cowen didn’t want to touch it with a barge pole but Lenihan died and Cowen was ordered by the EU to sign on the dotted line.

      So why was the EU so adamant that little Ireland should sign up for such an enormous debt? The answer is simple. The amounts borrowed by Irish Banks were so huge, that any default from Ireland would have put a run on the banking system all over Europe. Our so-called bail-out cost EU citizens nothing but the collapse of Irish banks could have closed their banks all over Europe so the EU acted and hung us out to dry in the process. The contagion for the EU was avoided at the expense of 4.5 million Irish and even better than that from an EU perspective, the Irish were enslaved for generations to come. Our assets are being stripped now via NAMA and have no doubt that the plan for Irish Water is to fatten it up for sale to some in-crowd in Europe. 

      So, far from Europe bailing Ireland out, we bailed them out, and our local gombeen men as well. It was the biggest scam in Irish history, one we may never recover from and far from being grateful, we should all be raging about it.

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