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Ireland - election and banks

posted 8 Apr 2011, 15:13 by Admin uk

 Never play the wild rover, no more

  April 3, 2011 by Michael Roberts

 Last week, the Irish government announced that the Irish banks would require another E24bn in capital in order to put them back on their feet..  This would be in addition to the E46bn that the Irish people through the previous Fianna Fail government had injected.  The total of E70bn was equivalent to over 45% of Ireland’s currently falling national output, the largest bailout of a national banking system in history, apart from the cost of restoring Iceland’s equally reckless banks last year.

The people of Iceland, just 220,000 in number, had banks with assets worth 12 times national output, because Iceland’s greedy bankers with the connivance of their conservative government which had ‘deregulated’ them, had not only made loans to their various shady business people, but had also invested hugely in property and businesses throughout the world, particularly in the UK.  Iceland’s banks offered higher deposit rates to customers around Europe than any other banks and so took in big deposits.  Even so, they lent multiple amounts and bought securities all over – way more than the extra deposits they collected (at a high cost).  When the credit crunch came and the Great Recession followed, they imploded, leaving Iceland’s people to suffer big losses in their savings, home repossessions, jobs and also a huge debt to pay back to depositors in England and Holland who had greedily invested in their banks, but demands their money back.  They are still picking up the pieces.

It’s broadly the same story in Ireland, only worse, in the sense that it affected not 220,000 people but over 6m.  Ireland’s banks did all the same reckless things that Iceland’s did,  but the absolute amount was way bigger.  Now the examination of their books (yet again), called stress tests, have revealed yet more dodgy investments and bad debts.  Now Ireland’s domestically-owned banks will be reduced to just two large conglomerates, both publicly-owned with taxpayers money, while the others will be folded up and their assets sold off.

Now those of who read this blog might be tempted to think that, in a way, the public takeover of the Irish banks is good news.  It could lay the basis for a proper banking service that could help businesses and households expand and survive with credit at reasonable rates.  Wrong!  The new coalition government in Ireland of the conservative Fina Gael and Irish Labour has no intention of keeping these banks in the public sector for one moment longer than necessary.  It is looking to sell them onto private investors, probably foreign banks, once the taxpayer has spent billions in cleaning them up.

And also the huge cost of this bailout is totally unnecessary.  The E70bn figure is only that large because investors in the Irish banks, who greedily put their money there to make higher returns are to be protected.  Those who bought bonds of the banks are assured of 100% repayment.  And their investments add up to more than half the cost of the bailout for taxpayers.  Ireland’s people are being asked to ‘tighten their belts’ over the next four years through huge cuts in public services, higher taxes across the board, 30,000 job losses in the public sector and more from the private sector, forcing thousands to emigrate out of the country yet again.

None of this would be necessary if the bondholders (who are mainly other big banks in Europe and speculative hedge funds) were not being compensated.  The government says it has been forced to agree to protecting the bondholders or the EU would not provide funding for the bailout.  But that’s nonsense.  If it had taken over the banks without compensation to the bondholders, then it could have adequately capitalised the banks with the funds of the National Pension Reserve Funds which had some E50bn in cash before the crisis began.  With the state pension funds backing, Ireland’s banking industry could be put on a firm footing and controlled and directed to provide credit for an expansion of public investment.  As it is, the pensions funds are being directed to pay for the speculative bondholders investments.

This outcome is very much a repeat of what happened in the US when they bailed out their banks.  Under the troubled asset recovery program (TARP), the former head of Goldman Sachs, Hank Paulson, made sure that over $700bn of taxpayers money was put aside to provide capital for the banks and ensure that their investors did not lose a cent.  AIG, the world’s largest insurance company was bailed out with over $150bn, most of which ended up in the accounts of Goldman Sachs, JP Morgan etc  to which AIG owed money.

Thus bank bailouts and nationalisation during the Great Recession have delivered ‘socialist handouts’ to the rich and ‘capitalism’ for the poor.  Profits are rocketing and wages are falling.  Taxes on personal incomes are rising, welfare benefits are falling and yet corporation tax is being cut.  Ireland is a classic example of who is paying for this crisis.

http://thenextrecession.wordpress.com


 Left turn in the Ireland of crisis

 by Jonas Ryberg,  Socialisten (Sweden)

 http://www.socialisten.se/

  Ireland is one of the countries that has been hit hardest by the
capitalist crisis. In the late 90s the country became known as ”the
Celtic Tiger”. The political leaders of the traditionally biggest party
in the country, liberal Fianna Fáil, turned the country into a neo-
liberal experiment shop. The bank and finance sector was completely
deregulated, big parts of the welfare system was privatized and an
unprecedented campaign for loaning was launched, where ordinary wage
earners were convinced to loan up both on the house and car. During
some years it went well, really well. But also this bubble had to
burst, and the bigger the bubble the longer the fall. Time and time
again throughout history, bourgeois economists have claimed to have
found the solution to the up- and downturns in the economy. The latest
twenty years, it has been the neo-liberal prophets that the leaders of
the world have listened to.

Since the crash of 2008 we know that also this set of economists have
not managed to control capitalism. The experiment has had devestating
consequences for workers the world over, not least in Ireland where
they went from boom to bust in just a few months. Billions upon
billions of public money has been pumped into the banks to avodi a
complete collapse. It has even gone so far that the IMF has had to go
in to save the irish state. But that kind of help doesn´t come free –
now draconian cuts are being prepared in the public services.

It is with this background that Ireland went to the polls on February
25th. It was a total restructuring of the political landscape. Fianna
Fáil was more or less erased from the political map and lost more than
than two thirds of its support. Justly, the party took the hit for not
foreseeing the economical crisis and for selling out the independence of
the country to the IMF. Instead Fine Gael, the other bourgeois party,
stepped up as the biggest party. The party went to the polls promising
to renegotiate the terms for the deal with the IMF and to sanitize the
economy. But as many have said the electoral programmes of the two
parties are similar to each other and both fight for the same
electorate.

But the interesting things about this election was not the bourgois
twins of FF and FG. No, the interesting thing in this election was
that for the first time in many years the workers movement went
forward. Labour Party gets its best result ever and left-nationalist
Sinn Féin have finally got a breakthrough outside of Northern Ireland.
Apart from this, the United Left Alliance (ULA), a coalition of small
leftist parties and independent socialists, went into the parliament
with a bang and got five mandates. The frontal name for the left
alliance is Joe Higgins from the Irish Socialist Party, who was
a member of parliament and then won a seat in the  European parliament.

Even if we will see a continued bourgeois government in Ireland, or
maybe a settlement between Labour and the ”middle of the road-party”
Fine Gael, the elections shows the frustration that has built up in
Irish society after the crisis hit. The collected workers movement has
to come out against a coalition between Labour and Fine Gael, which is
unacceptable, and instead take a firm stance against the crisis
packages and cuts. In the coming years we will see harsh attacks on
public services and the living standards on ordinary people in
Ireland.

Socialists from both Labour, Sinn Féinn and ULA has to gather and
build resistance from below if the attack on the welfare is to be
fought back. Irish wage earners face an intense battle, but with a
strong workers movement as a megaphone in parliament it can now go
forward and build the movement on the streets!

----------------------------------------------------

Labour Youth Chair opposes coalition

Madam, – Last weekend saw a fantastic victory for the Labour Party, with 37 deputies elected to Dáil Éireann. I felt immensely proud, as a member, to have seen my party grow from strength to strength under Éamon Gilmore. The Irish people have offered Labour an historic opportunity to reshape the course of politics. As the second largest party in the State, the people have asked us to lead an opposition to Fine Gael. With some 76 seats, incredibly close to an overall majority, Fine Gael was selected as the party to govern.

In the interests of democracy, it is appropriate that the Labour Party provide a robust opposition and keep this administration in check. Some have argued that Labour must be a “mudguard” to Fine Gael and restrain some of the more extreme policies advocated by that party.

Unfortunately, Fine Gael already has the capacity to receive support from Independents and Fianna Fáil, making a Labour contribution to government irrelevant. In 1994, when there was an almost even split between Democratic Left/Labour and Fine Gael, with FG on 47 seats and DL/Lab on 38. In that situation, it was necessary and productive for Labour to be in government and indeed that coalition achieved a great deal. We campaigned for Gilmore to be Taoiseach and to break the mould of Irish politics in the recent general election. The electorate have voiced their opinions and offered us an historic opportunity to be a real force in Irish politics. It is important that we seize it, and offer a coherent opposition, which can implement real change for the people of this country.

We must not prop up Fine Gael and offer that party a monopoly of power. Fine Gael and Labour are distinctly different parties. In any other European state, we would lead the opposition. It ought to be no different in Ireland.

Allowing a government to form with 114 seats out of 166 is inherently undemocratic and would allow a discredited Fianna Fáil, who the people rejected outright, lead the charge. Labour Youth believes that this new government must be accountable to the people, and the only way of achieving that is by creating a strong opposition, led by the Labour Party and Mr Gilmore. – Yours, etc,

COLM LAWLESS,

National Chairperson,

Labour Youth,

Cypress Downs,

Templeogue, Dublin 6W.

(from the letters page of  the Irish Times)

----------------------

Unite calls for Labour to lead opposition

February 28, 2011

 The Unite trade union has called on Labour to lead an opposition coalition of the left rather than entering into a coalition government with Fine Gael.

Unite’s Ireland Regional Secretary Jimmy Kelly said: “This election was about change, part of the change was unequivocal; the removal of Fianna Fáil from power, but the rest is now in the hands of the Labour Party leadership.”

Jimmy Kelly has called on Labour to lead the opposition in the 31st Dail.

Jimmy Kelly has called on Labour to lead the opposition in the 31st Dail.

“The people did not vote for a Fine Gael overall majority.

“Their policies on privatisation, austerity and income cuts did not attract enough support and should not now be facilitated by the tired old fallback of coalition with Labour,” Mr Kelly added.

Kelly said that Labour has “an historic opportunity to become the official opposition in the 31st Dáil,” leading a left wing coalition that would include Sinn Féin, the United Left Alliance and independent TDs.

“We can now see the end of the old and outdated political divisions that dominated Irish politics since the 1930s,” Kelly said, adding that Fianna Fáil had been “totally rejected” and “must not be given the oxygen of being an unwanted official opposition.”

Kelly claimed that the proposed Labour-led left opposition would have 60 seats in the new Dáil and would “present the Irish people with a real choice, a real alternative to Fine Gael’s programme of austerity, privatisation, and income cuts.”

Despite Unite’s calls, a Fine Gael-Labour coalition seems certain.

Labour leader Eamon Gilmore is meeting Enda Kenny this afternoon for a preliminary discussion ahead of talks on forming a coalition.

The deadline for forming the next government is the weekend and although there are still unresolved differences between Labour and Fine Gael it is expected that the parties will have struck a deal in time for a Labour conference next weekend.

Kelly suggested that when Eamon Gilmore meets with Kenny “he should explain that the old politics is over.”

He added: “If Fine Gael wants to form a government, they shouldn’t expect the Left to be a crutch or a mudguard.

“They should go to those of similar policy and psychology like Fianna Fáil or right-wing independents.”

“Labour should look to the interests of the nation and working people, create new alliances with an expanded Left inside the Dail and social organisations outside,” the Unite secretary continued.

Kelly claimed that a Fine Gael-led government would only last two to three years, after which “finally, the goal of a left-led government can become a reality. Labour should hold its nerve.”

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Is The Labour Party About To Miss The Best Chance In Its History

 by George_East on February 28, 2011

  http://www.allthatsleft.co.uk

 From the perspective of most other western democracies the politics of Ireland are pretty strange.  The two historically largest parties, Fine Gael and Fianna Fail, are both parties of the centre-right and yet would not ever consider entering coalition together.   Yes Fine Gael are more urban, more middle class and more socially liberal than Fianna Fail, but on economic philosophy there is little if anything between them.  Their respective origins, in the division between those who accepted the partition agreement of 1921 and those who rejected it is deeply rooted in a country which has a longer historical folk memory than most. 

So instead it is the Labour Party to which Fine Gael is looking as its coalition partner following last week’s seismic election result, which as, has Jackie South has reported,  seen Fianna Fail pushed into a poor third place not far ahead of Gerry Adams’ Sinn Fein.    Indeed the Labour Party, which has only once ever been in coalition with Fianna Fail, has always been the preferred coalition partner of Fine Gael which has never mustered sufficient seats in the Dail to govern on its own.

The Labour Party for the first time in its history is in second place in terms of numbers of seats and in terms of the first preference vote.  Fine Gael is comfortably ahead on both counts – with 36% of the vote (compared with Labour’s 19%) and a projected 75 seats (compared with Labour’s projected 38).  If Labour goes into government with Fine Gael the result will be a coalition government with a huge majority, commanding 103 of the 165 seats in the Dail.  It is what all the pundits expect to happen and coalition talks are underway according to Irish state broadcaster RTE.

Fine Gael are committed to the same policies of public spending cuts and austerity insanity of the despised outgoing government.  There will no doubt be considerable mileage for a while in blaming the last lot for the mess the Irish economy is in, but given that even further spending cuts and/or debt default are very real possibilities in Ireland in the coming years on the basis of the policies being pursued, one would have thought that this is a government to steer well clear of, particularly as a party of the centre left.  Indeed the fate of the Irish Green Party in the election, which saw the entirety of its parliamentary representation wiped out, should be a sufficient lesson in itself for parties of the left.  The polling position of the Lib Dems on this side of the Irish Sea should also ring alarm bells. 

Labour’s position, if it does go into coalition, has added potential for disaster as it is, like the British Labour Party, closely affiliated to the Trade Union movement.   Internal division and even splits in the party could easily follow if it puts itself in direct collision with many of its own members.

Unlike the Lib Dems in 2010 in the UK, staying out of the government would have the added advantage for the Labour Party of enabling it, for the first time, to be the official opposition.  Not only could it position itself to lead the fight against the suicidal economic policies that have been adopted but it could also through the oxygen of publicity afforded to the main opposition party in a parliamentary system permanently marginalise Fianna Fail.  This may be a once in several generation opportunity.  It is a moment in which Irish politics could finally align themselves along the familiar right-left lines seen in virtually every other western country.  

It seems sadly that the prospect for senior Labour Party TDs of getting their arses on the back seats of government limos is just too enticing.


Details of elections for 31st Dáil

Friday 25 February 2011

Summary of Seats Won (Change since previous election)

Fianna Fáil
 18 
-60
Fine Gael
 70 
+19
Labour
 36 
+16
Sinn Féin
 13 
+9
Socialist
 2 
Others
 14 
+8
Total
 153 
 166 

Click here for Elected candidates

www.electionsireland.org

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Just a brief few stats that may be of interest about the left.

The ULA polled  59,423 votes getting around 2.7% of the vote nationally and winning five seats.
(Socialist Party 26,770 , People Before Profit 21,551, Declan Bree and Seamus Healy 11,102)

The United Left Alliance (ULA) consists of three existing political parties,  Socialist Party (CWI),  People Before Profit Alliance  (including Irish SWP) and the Workers and Unemployed Action Group,[2] as well as former members of the Labour Party.[3]

The Workers Party polled 3,056 0.1% of the Vote

Left of Centre Independents polled 55145 votes around 2.5% winning six seats.
(To the List posted last Monday I added in Brian Markham, Sean Connolly Farrell, Robin Wilson, Mick Wallace, Veronica Cawley and one or two others that polled around 200 votes)
(Catherine Connolly may yet win in Galway West)

So over 5% of the vote nationally went Left other than to Sinn Fein or Labour. (that’s assuming I managed to include every Left candidate)
That is around half the vote Labour got in 2007.

www.cedarlounge.wordpress.com

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Ireland – Time to Resist

 By Finn Geaney (Dublin Council of Trade Unions and Irish Labour Party, personal capacity), who spoke recently at the Norwich Socialist Group

 On Saturday November 27th more than 100,000 people marched through the city of Dublin to protest against the widespread programme of cuts that affects every aspect of the lives of Irish workers and their families. Savage reductions in public services as well as pay cuts have been in operation for over two years. The loudest call at the demonstration was for the resignation of the Fianna Fáil/Green Party Government. Outside the General Post Office, the site where the Irish Republic was declared in 1916, a loud chant of ‘Out! Out! Out!’ left nobody with the slightest doubt as to the unpopularity of this government. The demonstration was called by the Irish Congress of Trade Unions (ICTU), the national body that unites all trade unions across the country.

The most recent opinion poll places the government parties at 16%, and in a recent by-election the government candidate received just a little above that percentage of the total poll.

Representatives of the International Monetary Fund came to Ireland in recent weeks in order to decide on what money they would loan to the Government, what interest rate they would charge on that money, and what series of cut-backs in living standards they would demand. With regard to the programme of cuts the IMF representatives found themselves in agreement with what the Irish Government had already agreed upon for the coming years. Their economic strategy is to reduce government spending from 35% of GDP which it is today to 3% of GDP within four years, without penalising the owners of banks, financial speculators or property tycoons, and without increasing capital gains taxes or introducing wealth or assets taxes or levying the property of the many multimillionaires who have left Ireland rather than pay any taxes here.

A very severe regime of falling living standards and reduced public services faces the Irish people in the coming decades unless these measures are reversed.

In an earlier indication of the widespread opposition throughout Irish society more than 40,000 students marched through Dublin on November 3rd in the largest student demonstration for a generation. More than two hundred special buses arrived in the capital carrying protesting students from all over the country. The issues raised on the march were threats of rising fees, reduced student supports and graduate unemployment. Yet following this protest university charges were increased by 30%.

Government Ministers and their supporters in the media have been trying to create an impression that the Irish people somehow support the programme of cut-backs. The nation must unite in this time of adversity, they proclaim. The dismal failure of Fianna Fáil governments over the last fourteen years is being clouded by hired commentators and economists in the big lie that everybody lived extravagantly over the period of the so-called boom and that now we have arrived at ‘pay-back time’. This falsehood is exposed by an OECD study produced two years ago that showed Ireland to be the 23rd most unequal society out of 29 developed countries studied.

The largest opposition party Fine Gael, identical to Fianna Fáil except in name, agrees with the current programme of cuts and has a few more of its own to add to the mix, such as their proposal to sack 30,000 public service workers. Unfortunately the Irish Labour Party too has accepted the big lie, but says that it would cut public spending this coming year by €4.5 billion rather than by the Government’s figure of €6.5 billion. All this is on top of the €7 billion that the Government took out in 2009 and the further €7 billion that was taken out in 2010. The Government now. plans to sell off major sections of publicly-owned industry in an effort to raise funds. Electricity, transport, postal services and health insurance are in the firing line. If the cuts did not work in the past why should they work now! Before the arrival of the IMF, trade union leaders had already agreed with the  Government for the implementation of a series of massive cuts over the next four years and had given up on the fight against the cuts that had already been imposed. This betrayal became known as the ‘Croke Park deal’, named after the historic location in which the betrayal was perpetrated. It is the absence of political leadership, combined with the abject betrayal of this current generation of trade union officials, that is making it possible for the Government to persist in its stated task and to remain in office.

One year ago, almost to the day, a general strike in the public services was called by the Irish Congress of Trade Unions. In the largest ever strike across the public sector, over 250,000 workers downed tools on November 23rd 2009. The same demand was advanced. Oppose the government cuts! Shortly after the demonstrators had arrived home from the marches that were held across the country trade union leaders were in talks with the Government agreeing that €1.3 billion be cut from the pay of public sector workers, along with other reductions in the public service. Yet the real power of organized workers was shown on that day. Civil Service offices were closed down, passport offices, the Revenue Commissioners and social welfare offices. Many Local Authority services were suspended. Schools, Colleges of Technology and Universities closed. So too did Dublin City Traffic Control services. Hospitals provided only a limited service on that day, as did the Courts. Swimming pools, museums, libraries, parks, as well as visitor attractions owned and operated by the State were closed. Department of Agriculture officers working at meat factories stopped work, as did customs officers at parts and airports. Off-duty police (gardai) joined their colleagues on pickets outside police stations. Prison officers paraded outside Mountjoy prison in Dublin alongside their work colleagues from other unions within the prison: across the road at the Mater Hospital nurses, oncologists, porters and other staff mounted their picket. Shortly after that, nurses, firemen and police officers (gardai) marched through Dublin in protest against the cuts in public service and the continuing attacks on public sector workers. Meetings of this group – Frontline Services – were held across the country over a period of weeks. Despite the protests of their members a trade union that represents army ranks, PDFORA, was prohibited from participating in these events.

Apologists for the capitalist system in Ireland have been describing the present economic crisis in the country as a classic situation of boom and bust, hoping thereby to soften political opposition by creating an expectation that somehow things will ‘work themselves out’. But they are incorrect. The recurrence of periods of boom and recession is part and parcel of the capitalist system, but there are aspects of the present crisis that are peculiar to the manner in which a boom in Ireland was generated in the early years of this century. The tendency of the rate of profit to fall, leading to a situation where the capitalists cannot realise the full value and profit inherent in commodities that are produced, create periodic crises within the system. Such crises, described by Karl Marx. in Capital as ‘ever-occurring explosions’, are endemic in the capitalist mode of production. But in Ireland other factors aggravated the situation. Financial institutions engaged in a spasm of frantic borrowing and lending. Combined with the sale across the world of new financial products such as hedge funds and credit default swaps, and an  out-of-control expansion of credit with no link to real production, created conditions for the Irish collapse.

Some seven or so years ago Irish banks began a crazy borrowing spree with major international banks. Billions of euro were borrowed. In 2003 alone some 10% of the value of Ireland’s Gross Domestic Product was raised in this way. By 2007 that figure had reached 60%. The money was used to fuel a property and building bubble. Massive sums were paid out for derelict sites on which luxury apartment blocks and shopping malls were constructed. Hotels were built in remote areas of the country where major tax concessions could be secured. Many of these building developments now lie abandoned or uncompleted in remote regions of the country. So many apartments are unoccupied that the Government is considering demolishing them. During the frenzy, bank owners and executives paid themselves enormous salaries and bonuses, even as these same banks were imploding. Industry chiefs did the same. The average pay of Chief Executive Officers in 21 of the largest private companies was €1.1 million in 2007. Two years later this figure had risen to €1.6 million, an increase of 45%.

A clique consisting of bankers, property speculators and Fianna Fáil Ministers pushed the process to breaking point. Planning decisions were secured through bribery; tax concessions that facilitated the accumulation of personal wealth by multimillionaires were introduced. Corruption became endemic. One Fianna Fáil Minister was sent to prison. Others, including, two Prime Ministers (Taoisaigh), were hauled before legal Tribunals to explain their actions. Some years ago oil and gas reserves that were discovered off the coast of Mayo were given scot free to Shell by a Fianna Fáil Minister.

One of the knock-on effects of the credit-based building inferno was to raise the cost of ordinary homes to such an extent that houses in Dublin became more expensive than in London. When property values collapsed, as inevitably they were bound to, creditors sought the return of their money. Irish banks found themselves in serious trouble; some were insolvent. But Irish workers are paying a big price for the profligacy of the rich minority. The Central Statistics Office estimates that today some 77,500 home owners are in arrears with mortgage repayments. 30,000 of these may have to default. Eviction is becoming a serious problem within the country. Huge costs are now also being borne by the middle layers of Irish society.

Friedrich Engels, writing of housing conditions in 1872, said that the growth of large modern cities gives land in certain areas “an artificial and often colossally increasing value”. Even he could not have foreseen the extreme extent of that phenomenon in Ireland in the early years of this century.

After the first hints of the impending crisis surfaced the Fianna Fáil/Green Party Government in September 2008 pledged that the Irish tax-payers would provide whatever funds the banks needed in order to survive. What became known as the ‘bank guarantee’ was introduced; all private deposits, investments and bonds would be safeguarded and guaranteed in full. The potential cost of this measure could reach €450 billion. Ireland’s Gross Domestic Product for that year amounted to €182 billion. In effect a large segment of Irish financial capitalism collapsed, but the State declared that all the existing banks would be maintained as private institutions using public funds as collateral. If the chips were cashed in then the total value of all final goods and services produced within the country for two years would not be sufficient to meet the debt!

Shortly after the decision to support these failing institutions was made a one percent levy on all wages and salaries was imposed. In addition child benefit was cut, Special Needs Teachers were sacked, many old people lost their entitlement to free medical care, and the pupil/teacher ratio was raised resulting in the loss of up to 2,000 teaching jobs. But these attacks on public services were not sufficient to save the banks. Share values collapsed. One bank, Anglo Irish, failed entirely but the Irish Government insisted in shoring it up, to the extent that to date an estimated €30 billion of public funds have been thrown away into this black hole of financial capitalism. The Government continued with its endeavours to find whatever cash that the banks found to be necessary. In early 2009 all public service workers suffered a cut of 7.5% in their pay (this was called a ‘pension levy’!) Out patients in hospital emergency wards were to be charged a fee of €100 for treatment. In January 2010 all public sector salaries and wages were reduced by a further 5%. The crisis did not abate. It worsened.

The country’s banks were massively indebted to international financial institutions, and they in turn were owed billions in unpaid loans that resulted from the collapse in the property market. The Fianna Fáil/Green Party Government again came to the rescue by setting up a state-owned body that would take over responsibility for these unpaid loans, the National Asset Management Agency (NAMA). It would be the tax-payer and not the banks that would have to chase up the defaulters; all this at a further possible cost of up to €80 billion.

Ireland is now affected by three interlinked crises. It faces a fiscal crisis: there is a €20 billion gap between Government income and expenditure. It faces a debt crisis: international banks and financial institutions will no longer lend money to the Irish Government or to Irish banks. It faces a banking crisis: some of the largest banks in the country are insolvent.

Over the past two years Irish banks have borrowed €119 billion from the European Central Bank (ECB), This amounts to around 25% of total lending by the ECB, to a country that represents no more than 1% of the total economy of the 27 countries of the European Union. The right wing political leaders of the dominant countries of the European Union would not allow that situation to continue, with all the implications that it has for the large financial institutions of Germany and France and for the trade of countries within the euro zone. The Irish Government’s continuing inability to solve the problems has led to the intervention of the International Monetary Fund and a loan of €85 billion. The penal interest rate of 5.8% imposed by the ECB and the IMF will cripple the country if allowed to proceed.

The strategy of the Fianna Fail/Green Party government is to take €6.5 billion out of the economy next year, and a further €9 billion in the two subsequent years. All of this is in addition to the €14.5 billion that have been taken out since 2008. The Government insists that money has to be raised by such measures as cutting social welfare payments, reducing pensions, cutting the minimum wage, reducing the pay of all public service workers, increasing tax on low-paid workers, abolishing social supports, introducing new taxes on homes and charges for essential services. The money lenders have been given assurances that their wealth will not be adversely affected by the current crisis. Ireland has one of the lowest tax takes as a percentage of GDP in the European Union, 32.5% versus an EU average of 40.9%.

The savage Budget that was carried through by the Fianna Fáil/Green Party Government, coupled with their Four Year Plan of austerity, constitutes a slash and burn strategy of which the IMF would be proud. They were. The IMF found themselves in agreement with the Fianna Fáil/Green Party Government. There are now some 270,000 fewer people at work in Ireland than there were in 2007. The current official rate of unemployment is 14%. The real figure is far higher as tens of thousands have emigrated in search of work. It has been estimated that the new Government measures will place a further 60,000 people on the dole queues. The trade union INMO (Irish Nurses and Midwives Organisation) estimates that a majority of this year’s 1,600 graduates in nursing and midwifery will have left the country in search of work before the end of 2010. In addition the Health Service Executive, a statutory body responsible for the nation’s health service, has stated that another 1,900 jobs were lost in the past two and a half years. According to the INTO (Irish National Teachers Organisation) one thousand fully qualified primary teachers cannot find regular work, eventhough more than one hundred thousand children are in classes of 30 or more. The Union of Students of Ireland estimates that over 1,250 people are emigrating from Ireland each week.

The introduction of the IMF to Ireland does not change the economic system. The rentier class will continue to speculate in parasitic, financial products, while stock markets devise new methods of making swift monetary gains. The Government pretends that growth is again beginning to emerge in the economy, but there is no real growth here. Capitalism has no answer. Profits are being made, but they are being exported by the multinational companies. More than €32 billion in profits is sent out of the country each year in repatriated profits. Employment in the multinational sector has dropped by 3,000 in the recent period. Growth in that sector alone does not guarantee expanding prosperity as only 10% of the goods and services that support multinationals is sourced within the country. Investment, the lifeblood of the system, fell by 9.5% in recent months. It is investment that drives productivity and jobs. Yet overall investment today is at 1998 levels. Reliance on foreign direct investment will not solve the unemployment problem in the country. Two years ago Dell abandoned Limerick for Poland at a cost of 1,500 jobs. The new foreign companies that are setting up in Ireland, such as Google and Microsoft, are only pecking at the surface of the jobs crisis.

The entire banking and financial sector has failed dismally to assist citizens or small businesses. A rational banking system is necessary in order to sustain industry and the services. But instead of such banks, modern capitalism has created instead a series of gambling casinos where entire pension funds and personal savings are gambled away on international stock markets. It is time to abolish that system. The whole gamut of banks and other financial institutions, including insurance companies, should be brought into public ownership and placed under democratic control. Compensation to previous owners should only be paid on the basis of proven need. The books of all these institutions should be open to public scrutiny so that the huge amounts of money that were made during the years of the so-called boom can be disclosed. The losses sustained by some constituted the gains secured by others. This information must be made public knowledge. The universal bank guarantee, introduced by the Irish Government in 2008 should be withdrawn. Similarly the undertaking by the Government to repay the €85 billion loan to the IMF and the European Central Bank should be withdrawn. The money that is being collected from Irish social welfare recipients and from the wages of public service workers is going towards the profits of the large German and French banks. This process must be halted. The rich should pay in full for the crisis that they created.

There is no solution to the current crisis within the confines of any individual country. The crisis of capitalism is an international crisis. The collapse of Lehman Brothers Bank in 2008 had repercussions for living standards across the globe. At the present time within Europe a number of countries are facing threats from financial institutions.  Greece, Portugal, Italy and Spain are all victims of the same clique of international money-lenders known as the ‘Bond Markets’. Like loan sharks these parasites move from country to country trying to extract the maxi
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