A Place to Stand

The Irish government are coming under pressure to accept a "bail out" from the EU because international financial institutions (eg the EU) are worried & politicians from bigger EU countries (eg Angela Merkel of Nazi Germany) have been talking up a crisis. In fact the Irish crash is entirely because they have guaranteed their banks. Their national debt would normally be considered pretty small compared to our, though it depends how it is reported eg

"Irish deficit blooms to 32%" - BBC
"UK deficit lower than feared at 62.2%" Guardian

Last night both BBC evening news & C4 news asked members of the Irish government if they were "ashamed" of their financial situation. A remarkably coincidental use of words if they are genuinely independent broadcasters. I do not believe I have heard them ask precisely the same question of members of the British, US or indeed other EU governments. John Snow in particular was purely insulting asking that question & when the minister explained, reasonably, why Ireland's economy itself is not in such straits simply repeated the question again & again.

Daniel Hannan has done a number of blogs on this subject. I would particularly recommend "Ireland's woes will continue until it leaves the euro" which clearly explains why Ireland's inability to set its own interest rates made the property bubble inevitable & why their current inability to let their currency fall, as ours has done, prevents recovery.

I wrote this letter to the Irish Independent & with a slight alteration to the entire UK press. Somewhat to my surprise, because I could see why they might not be keen on advice from a Briton, the Irish paper printed it. To no surprise no UK paper seems to have done so.

Ireland must resolutely refuse the EU's poisoned chalice of a so-called bailout.

Ireland's best answer would be to drop out of the euro, introduce new punts valued at 1:1 for the euro, accept the debts in that and let the punt fall as sterling has done. This would hurt the euro and cost the mainly German and Swiss bankers and super rich who are the majority owed money.

Irish banks overheated because Ireland is part of the euro and thus when German money was flooding in they couldn't raise interest rates as any prudent government would have done. Thus the property bubble was inevitable. The people who lent them that money were taking a business risk and business risks should involve an element of risk.

There is nothing, apart from being tied to the euro, intrinsically wrong with the Irish economy, or at least nothing not at least equally wrong with Britain's, but Britain is starting to recover because the pound could fall 20pc.

The 'bailout' is not to help Ireland (briefings that the price would be raising our corporation tax which is certainly not to Ireland's benefit prove that). It is to pay the super rich, to maintain the euro's credibility and to destroy an economy that has been a standing reproach to the failure of bigger EU economies.

Neil Craig
Glasgow, Scotland

I sent them a link to this article investigating who the Irish bank's money is owed to & turns out to be mainly banks & billionaires in Germany & Switzerland (HT to Mark Wadsworth) which says "To give you an example, one of the private banks is EFG Bank of Luxembourg. EFG stands for European Financial Group which is the third largest private bank group in Switzerland. It manages over €7.5 trillion in assets. It is 'mostly', 40%, owned by Mr Spiro Latsis, son of a Greek shipping magnate. He also owns 30% of Hellenic Petroleum. His personal fortune is estimated to be about $9 Billion."

Looking up Mr Latsis one finds that, by the purest coincidence "He is a longstanding friend of the President of the European Commission, José Manuel Barroso, whom he invited on a trip on his luxury yacht. In 2005 this incident made Spiro the centre of a corruption scandal involving Barroso. The British MEP Nigel Farage requested that the European Commission disclose where the individual Commissioners had spent their holidays. The Commission did not provide the information requested, on the basis that the Commissioners had a right of privacy. The German newspaper Die Welt reported that the President of the European Commission, José Barroso had spent a week on the yacht of Spiro Latsis. It emerged soon afterwards that this had occurred only a month before the Commission approved 10.3 million euro of Greek state aid for Latsis' shipping company."

From the same organisation that wants Ireland to surrender its sovereignty to them so that the taxpayer rather than Mr Latsis' will pay Mr Latsis' business & risk a tiny part of his E7.5 trillion portfolio. That & to deprive Ireland, by raising its business taxes of the chance to "save itself by its exertion & save Europe by its example".

UPDATE _ I have to acknowledge an error here pointed out by Spiked when I questioned one of their articles. Ireland's deficit for this year will be up to 32 per cent to bail out the banks after running at much lower figures in recent years rather than their whole national debt as I assumed. I have put the bits affected by my error in italics. Here's the 'national debt clock', currently running at €90billion.

Nonetheless E90 billion (about £75 bn) is only marginally proportionally above our official debt & less if we include our bank debt. They have cut spending more than us (we are not really cutting spending just not growing it as much as inflation would require). Like us their electricity supply is endangered & unlike us they cannot devalue but otherwise the economic basics are good & competitive. If the EU allow them to remain so.

Labels: Fixing the economy, International politics, letters