Wednesday, May 30, 2012

Why "NO"

Firstly I must point out that I hold no truck with SF nonsense policies, nor Gangley’s  ravings, nor do I trust Shane Ross after his cheerleading pronouncements during the boom for Anglo Irish Bank. I also declare that I believe, for the most part, FG/Lab are doing a reasonably good job in government with the mess they inherited. So why am I voting no?
For me it comes back to that faithful day in 2007, when the late Brian Lenihan, under pressure from vested interests in the domestic banking sector, undertook to guarantee the deposits within the Irish banks. However, not only did he do that, but he included the debts of these institutions in his undertaking. These debts (Corporate Bonds) were now being underwritten by the Irish Government (and therefore its citizens) rather than the institutions. At the time of this action there was uproar across Europe, and especially the UK, at our action to safeguard these deposits. The eye was off the ball regarding the bonds both here and abroad. The then government (in their “cute whore” “pulling a stroke” ways) felt that they would show the world that we as a country were solid and reliable, with a banking system that was equally strong. The banks (Irish Nationwide springs to mind) were encouraging savers in the UK (who had seen a run on Northern Rock) to move their monies to them (much to the annoyance of Mr Darling). How wrong they were…
Move on to November 2010 and the Irish Government in light of their inability to grasp basic economics and their fear of vested interests called upon The IMF, The ECB and The EU to bail us out. This was, and remains, a shame upon us as a people. However, in a way, I was personally glad to see these arrive, as it meant that the parish pump fifth rate politicians were, for all intents and purposes, now merely puppets. A new government swept in in March 2011 and the electorate decided that they did not want a single party government who could stick to their manifesto, but a blending of a centre left and a centre right party. So again I don’t blame Mr Gilmore or Mr Kenny for reneging on election promises, that is what WE voted in.
So moving on to where we now stand. I believe we need austerity. I believe we need to be as balanced as we can be. So the idea of doing this appeals to me greatly. By austerity, I mean that we need to rein in spending and progressively tax income more and pay for services that provide social and economic value. I am NOT against the Household Charge nor the  imposition of water charges (with or without a meter). I don’t WANT to pay them, I can ill afford to pay them, but I think we SHOULD pay them. But I also believe that, as a soverign nation we need to be able to make decisions about our economic policy. Under the original treaty that we signed up to join the Single European Currency (the Euro) we agreed that the national budget would either be in surplus, or in deficit up to 3% of GDP. A sensible approach, which we must adhere to.
What this Fiscal Compact Treaty does is take away the prospect of soverign governments in this state (or any others) from ever again following the General Economic Theories of John Maynard Keynes.  This is not a policy that you would want to employ ALL the time, but it is a policy that you may (or indeed should) apply in times of economic bust. This is the policy that is being perused by the current US administration, the UK to an extent, India, Australia etc. So while we in the Eurozone, outside of Germany, languish in a downward spiral in order to ensure that Germany’s historical fear of inflation is appeased, these other countries are working their way out of it.
So why NO? Because I don’t want this government, or any Irish government in the future to have access to this fund. I do not believe SF when they say we can access it by voting no, I hope we can’t. The ECB and EU let us down in our time of need with the extortionist interest rates they charged us, in fact it was the IMF and our bi-lateral arrangements (notably the UK) which provided us the cheapest rates initially. I ask this question. Where do Germany go when they need funding? Well they go to the “markets”, just like we always did. The markets make a decision on how much interest we would need to pay to make them interested in buying our bonds upon a number of criteria, the most notable being do they think they’ll get it back!
We have shown for many years that we always pay our debts. We’re even paying debts that should not be  but are now ours. I don’t care if the EU or the ECB think we are the best boys in town, but I do care that investors (the markets) think we are.
If we pass this treaty then this “insurance policy” (because of a lower interest rate) will be our first and only port of call for borrowing, not the markets. If the markets are our only source (as it should be) then we will have to make a more concerted effort to show them we are trustworthy, we are growing and we are both independent and interdependent on our trading partners. No for me means stand up and be proud and stop lying in the gutter waiting for someone else to dig you out.