Have you been following the debt situation in Ireland? I find that is presents us with a fascinating question as to what is right and proper for the Irish people and for the World economy - and whether the two may be reconciled.
Bloomberg announced just a short while ago:
Nov. 28 (Bloomberg) -- European governments threw debt- strapped Ireland an 85 billion-euro ($113 billion) lifeline and scaled back proposals to saddle bondholders with losses in future budget crises, seeking to reverse the market selloff menacing the euro.
Notice the wording - "threw debt-strapped Ireland .. a Lifeline." Sounds like the European Governments are saving Ireland - saving the people of Ireland from undue hardship. But is that really the case?
Iceland’s President Olafur R. Grimsson said his country is better off than Ireland thanks to the government’s decision to allow the banks to fail two years ago and because the krona could be devalued.
“The difference is that in Iceland we allowed the banks to fail,” Grimsson said in an interview with Bloomberg Television’s Mark Barton today. “These were private banks and we didn’t pump money into them in order to keep them going; the state did not shoulder the responsibility of the failed private banks.”
“How far can we ask ordinary people -- farmers and fishermen and teachers and doctors and nurses -- to shoulder the responsibility of failed private banks,” said Grimsson. “That question, which has been at the core of the Icesave issue, will now be the burning issue in many European countries.”
Yes. How far indeed do you expect farmers and fishermen and teachers and doctors and nurses -- to shoulder the responsibility of failed private banks? Because make no mistake about it, the "people" actually being saved by this bailout are largely European Banks.
According to the
New York Times
"French and German banks have lent nearly $1 trillion to the most troubled European countries and are more exposed to the debt crisis than the banks of any other countries, according to a new report that is likely to add pressure on institutions to detail their holdings.
French banks had lent $493 billion to Spain, Greece, Portugal and Ireland by the end of 2009 while German banks had lent $465 billion, according to the report by the Bank for International Settlements, an institution based in Basel, Switzerland, that acts as a clearing house for the world’s central banks."
So the bailout is really about bailing out French and German banks.
From Charles Hugh Smith from Of Two Minds:
Ireland, Please Do the World a Favor and Default
Ireland would save the world from much misery by defaulting now and driving the vampire banks into liquidation.
The alternative title for today entry is: Ireland, please drive a stake through the heart of the vampire banks which have the world by the throat. The entire controlled demolition of the Eurozone's finances can be summed up in one phrase: privatize leverage and profits, socialize losses and risk.
The basic deal is this: protect the bank's managers, shareholders and bondholders from any losses, while heaping the socialized losses and risks on the taxpayers and citizens.
While there are murmurings of "forcing bondholders to share the pain," any future haircut will undoubtedly be just for show, while the Irish pension funds are gutted to bail out the banks.
What do the Irish people think? According to one
blog:
As a nation we're a joke, a laughing stock, and now it's time to become a colony of the IMF under the direction of the same cowboy outfit that brought peace and prosperity to Argentina and Iceland. O Joy, I just can't wait. We the Irish People have our asses greased for yet another bout of sodomy. We're used to it. It feels good. And this time we walked right into it. Heck, we can always get drunk afterwards, have a rare old session and weep and wail over our Fenian dead.
Very strong words. The Irish believe that they are becoming debt slaves. And today thousands protested.
"What hurts me the most is why is the taxpayer paying for the IMF. Why are we bailing out the banks. These are the people who took the risk, let them take the hurt, let them feel the hurt." That is the common refrain of the tens of thousands of people who took to the streets today in Dublin, protesting against the government's rescue of various European banks (and Goldman Sachs) investment losses. More from RTE: "Gardaí said that around 10,000 people started the march, however the crowd swelled to around 50,000 people as it moved down the quays. Speakers at the march had estimated that the crowd was between 100,000 and 150,000. A small group of around 400 protestors are currently at the front gates of Leinster House. Some 60 gardaí are lining the footpath in front of the building, with crash barriers erected in front of them."
So in order to save German and French banks, Ireland will incur debt of $115,000,000. How will the Irish people pay for this? Tax increases and reductions in social services of course. And how do the Irish feel about this? From the Independent:
Asked if they agreed with a proposed €1 reduction of the minimum wage, 66 per cent said no, while 34 per cent said yes. Asked if they supported a proposed cut to child benefit, 60 per cent said no and 40 per cent said yes.
A proposed increase in third-level fees was rejected by 65 per cent and approved by 35 per cent. Asked if they agreed with a proposed reduction in tax relief on private pensions, 59 per cent said no and 41 per cent said yes.
The public was more evenly divided on the issue of broadening the tax net. Asked if they agreed that everybody who earned over €15,300 a year should be included, 52 per cent said no, while 48 per cent said yes. The proposed €100 property tax was rejected by 55 per cent, with 45 per cent in favour.
So the Irish really don't want new taxes and cuts in services.
What is the alternative? Default. Is that so shocking? That is the only negotiating tactic a debtor has. After default you can always "negotiate."
Russia defaulted in 1998 and guess what? Russia still exists.
Am I advocating default? Not necessarily. What I am questioning is whether the "loans" are best for the Irish people? The paradigm of debt-money (and national debts) is that it was created by the banks, for the banks, and is supported by banks.
No less than Thomas Jefferson questioned the issue of debt.
And to preserve their independence, we must not let our rulers load us with perpetual debt. We must make our election between economy and liberty, or profusion and servitude.
Thomas Jefferson
And there is the question I have raised - have the Irish people been sold into servitude? Servitude to the IMF and large Banking conglomerates.
The borrower is slave to the lender. When you are in debt to another, you enter into a slave/master relationship with your creditor. (Proverbs 22:7)
So the Irish are now indentured servants of the banks.
Ironically debt bondage has been defined by the United Nations as a form of "modern day slavery" and is prohibited by international law.
I guess that doesn't apply to Too Big To Fail Banks.
Would it be better for Ireland to default? Who is really being saved by this bailout?
Fascinating questions.
