Monday 22 October 2012

THE DIRTY DOZEN w/e Oct 28th 2012


A Reassuring Lie, starring Enda, Eamon, Micheal & Pat

Yet another empty statement from Angela Merkel and we're all supposed to jump for joy. Words, that's all, empty words; if the EU/ECB (which she seems to own) is going to give us our money back, then let them state precisely that, in simple straightforward terms. Of course there is no intention to repay a cent of Ireland's so-called 'legacy debt' but yet again we're fobbed off (the middle of next year at the earliest before anything is done, says Enda) and yet again we buy the rhetoric.

It's double-edged of course - the world is also buying the same kind of empty rhetoric from our own government. There is a version of the Irish economy which is being presented to the world by Enda, Eamon, Michael, Pat and the rest, and then there are the facts.

Let’s start with the debt/GDP headline figure for 2011 as reported by Eurostat in April of this year:
Gross Government Debt (GGD): €169.3bn
Gross Domestic Product (GDP):  €156.4bn
Ratio GGD/GDP: 108.2%

Now let’s look at the facts as they pertain to Ireland.

The GGD above does NOT include the government exposure to Nama debt, which Namawinelake reckons to be €27bn in government-guaranteed bonds (the reckoning is based on NAMA's accounts and the schedule of outstanding bonds updated on the website); neither does the GGD total above include Irish government exposure to possible losses in the IBRC which, when the interest of €18bn on the Promissory Notes is taken into account (we pay that interest), could be to the order of €15bn.

On the other side of that coin, the Irish Examiner's Ann Cahill had a recent article in which the EU itself complained that the multinationals were skewing the figures in their claims for production in low-tax Ireland, which – by extension – means they are also skewing the figures for GDP (three times as productive as the EU average, twice as productive as the Germans - I mean we're good, but we're not that good!). Most economies have very little difference between GDP and the more pertinent GNP (Gross National Product) but this is not the case in Ireland. Here, because of the multinationals, there is a huge difference; our GNP for 2011 was €129bn.

Now do the calculation:
TRUE GGD: €202bn (est.)
GNP: €129bn
Ratio True GGD/GNP: 156.5%

Already we’re well past the point of no return but throw in a few other very relevant facts from the Irish economy.

2013 –  €17.4bn; 2014 – €5.9bn; 2015 – €11.7bn 
2013 –  €6bn; 2014 – €8.2bn; 2015 – €3.6bn 
2013 – €3.06bn;  2014 – €3.06bn;  2015 – €3.06bn

2013 –  €26.5bn; 2014 – €17.2bn; 2015 – €18.4bn

Have I mentioned projected budget deficits? 

According to the government figures the current unemployment rate is around 14.8%; according to a source I would rather trust, economist Constantin Gurdgiev, the true figure is over 17%. 

Consider this then. To address all the above problems, while slashing spending the government is simultaneously increasing taxes, trying to squeeze additional revenue from a decreasing workforce in a situation where Ireland’s private debt overhang already exceeds that of any other European nation – nearly double that of Greece. Blood from a stone?

How does all of this add up? Enda, Michael, Eamon and the rest of the government believe that by presenting the false figures, the false front, they will encourage foreign investors to come to Ireland, this famous FDI we’re all learning about in this crisis – Foreign Direct Investment. Meanwhile they are making things impossible for the existing indigenous businesses to continue to operate.

If we are to get ourselves out of this mess we need a bank debt writeoff. It’s that plain, it’s that simple. And right now, just for starters, we need to tell the ECB - we’re not paying another cent of Promissory Notes, not a cent. Not because we want to play hardball, not because we want to show that Ireland isn’t a country to be messed with, not even because of the absolute injustice of what’s been forced on us, but because we can’t pay. 

The bank debt burden is crushing Ireland, surely and not-so-slowly anymore. We need to protest, we need to let the world know the true story. In Ballyhea and Charleville we’ve been doing it for 86 weeks. This Saturday we’re heading up west, stopping off at Ennis (O’Connell Monument 9.15am), Galway (Bus Station 10.45am), Castlebar (Spencer Street 12.45pm), Sligo (O’Connell Street 2.30pm), Donegal (Lidl carpark 4.45pm). If you're anywhere around those areas, we’re asking for your support. Meanwhile, the next 12 bonds, the bonds we're told don't matter any more, starting with two bonds being paid today that total over €740,000,000.

Regards, Diarmuid O'Flynn

1 comment:

  1. I have a limited understanding of Economics, but an anology that sprigs to mind is of a local builder who eventually got severely injured.

    He kept taking scaffolding from the bottom to put at the top.

    Eventually, the whole structure collapsed