The big boys are in town
The second in a series of guest posts by Irish citizens about what they’re thinking in the economic crisis — this one is from Padraig McLoughlin (32), a scientist who lives in Dublin.
“I started writing this piece a week ago last Sunday, and in the short time since, events have really overtaken it. During the past two weeks, we’ve had denials, evasions and other forms of spin from the government. But on Sunday, in an emergency broadcast from government buildings, it was announced that the IMF, EU, UK and Sweden would be providing us with financial assistance. The IMF will be in charge of our financial policies for at least the next three years.
I really have no idea how to react to this. I work in a research organization funded by the public sector. We have already had a 25% salary cut and have had to get used to not having enough money to repair equipment. At work the heating can only be used for an hour a day at work as we can’t afford any more. The rationale behind the salary cuts was that I had a guaranteed pension and job – but with the IMF in town the only guarantee that still exists is that of the banks. Health, social welfare, education and basic infrastructure will all probably be sacrificed.
While the banking collapse had international dimensions and has affected large sections of the world, in Irish terms the state-funding crisis goes back to the bank guarantee scheme. Not only was it a spectacularly bad idea, but Brian Lenihan & co. boasted that it was the cheapest bank bailout in history. In reality, we came close to destabilising the banking sector in Germany, France and the UK, and didn’t even consult the EU Commission beforehand. This happened on top of the collapse of HypoReal and Depfa (German banks with substantial operations in the IFSC – the trading in the IFSC brought them down, leading to semi-nationalisation). We used up any good credit in Europe for a scheme that was never going to work.
The next scam was NAMA, where property loans were transferred from banks to a state asset management company. In return, the banks got state credit notes, reclaimable from the European Central Bank (ECB) for cash deposits. The banks were not expected to go directly to the ECB – we’d also given them €80 billion or so in extra capital – but the Irish banks have been reclaiming this money from the ECB, meaning that they’ve used up 15% of the ECB emergency funds. Not bad for one of the smaller Eurozone economies!
Much of what has been going on is public knowledge to anyone reading foreign media or with a BBC signal. Despite this fact, the Irish government denied there were any problems or that negotiations were underway. Last week the politicians finally admitted that they’d been in talks for quite some time.
Sunday’s press conference was truly sickening. You might have expected a show of guilt, shame or contrition from the Taoiseach Brian Cowen, but all we got was smug arrogance, along with his usual irritability when questioned. Until then, I’d wondered if it could all be a piece of theatre — the government has a majority of three at the moment, which will be a majority of two by December, and probably a minority administration by April of next year — but it’s now obvious that this was not so. The government has called in the big boys, still insisting that it was making the correct decisions all along.
No final figures have been announced, other than that the sum is somewhere between €80 and €100 billion. The strings attached to it are still a matter of negotiation, so we plebs can’t be informed of them just yet. We even had a piece media manipulation towards the end of the press conference by the state broadcaster, RTE. Vincent Browne (a journalist), started asking some probing questions about the exact figures, but RTE cut the feed and went to ads.
Still, the one piece of hope I have this evening is that we are just those four by-elections away from the fall of the current regime.”