The Irish may have spoken, but they are pissing in the wind

Springtime for Rompuy and Euroland, Winter for Ireland by Wrinkled Weasel
The Irish elections have resulted in a catastrophic defeat for the ruling Fianna Fail party. The words "political annihilation" have been used to describe the defeat, which prompted a massive turnout of the electorate in the wake of large cuts in public services and tax increases. The measures, forced upon the Republic of Ireland by the EU/IMF bailout is apparently non-negotiable. One analyst says that the cost of servicing the debts incurred on the back of the banking crisis amounts to 85% of Ireland's income tax revenue.

What strikes me about this is that this was where the UK was headed when Gordon Brown was in power. To be fair, the global crisis in banking was headed off quite quickly and dare I say, efficiently, at least as compared to the Irish situation. Perhaps the key difference is not Gordon Brown, but the fact that we are not in the Eurozone, constrained to propping up a massive Ponzi Scheme.

Britain has used a number of levers to work the global problem on a domestic level. Inflation, the secret tax collector has done most of the work accompanied be devaluation. And it is the latter that has made all the difference. We are not in the Eurozone. We have not suffered by having an artificially high currency. We are, however, not immune. The UK has lost billions in the Irish Banking sector. RBS, which is mostly owned by the British Government and owns Ulster Bank, wrote off £1.16 Billion last year on bad Irish debt. Lloyds, in whom the British Government has a 43% stake, similarly wrote off £4.3 Billion.

So, although we may be thankful that we are not in the Euro currency fiasco, we are being affected and it will be taxpayer's who, as usual foot the bill, for there is no question that private bankers will be paying towards the crippling public debt in Ireland, nor is it likely that the change in government will affect the loan agreement with the EU.
The Irish people may have spoken, but it will change nothing. The lesson to be learned is that although the economic crisis is global, it has been unduly worsened by the madness of protecting the Euro.


Jim Baxter said...

The taxpayers wil foot the bill but it was the majority of those same taxpayers who enjoyed for so long the cosy idea that their houses would just become more and more valuable. Those same taxpayers relied on 'equity' to live beyond their immediate means, to borrow agains their property to consume.

Had govenments tried to discourage or limit this by regulation there would have been screams about the 'nanny state' from many of those very people who are screaming now that governments did nothing.

Twig said...

Interest rates were too low for too long. We need to quit the EU before we can straighten out the economy. They're too free with our money.