Economic crisis blogburst 7: “They’ve blown up the Death Star?”

– To Faisal Islam Ireland is a nation looking for someone to blame… But is very worried of all this talk of renegotiating a budget that has never been a purely domestic production anyway…

Whoever heard of an IMF structural adjustment policy being negotiated in the middle of an election campaign. Yes, it sounds very democratic. But it is fraught with peril.

– And, it seems, demogogic outrage is all the, er, rage

– But Islam may not be accounting for the institutional cutest hoorism of the state’s politics. Michael Lowry in particular has been trying to sell Fine Gael a particularly nasty self serving dummy…  P O’Neill comments:

…having had the leverage of his side-deal with the Coalition for nearly 3 years in return for his vote, runs to the hills at a time of true crisis and declares that it’s up to Fine Gael and Labour — shut out of government by deals with independents and small parties — to help pass the budget.

– Elsewhere, the IMF – who are in for over a third of the cash – are facing questions over their role in the bailout. Not least when the interests of the Eurozone diverge from those of the international markets. But also as Simon Johnson, a former IMF economist, points out:

The key issue is when they recognise that they will seriously have to write down bank debt, and the IMF is likely to be much keener on that than is the EU.

Hmmm we’ve not heard much yet on the detail of the write down of bank debt, or restructuring of the banks themselves.

– Michael Somers, former head of the National Treasury Management Agency, had this to say on Saturday in the Irish Times:

The biggest problem is, of course, the banks. It amazed me that we could have credit growing at 20, 25 or even 30 per cent a year when nominal GNP was growing in single digits. What basic monetary economics I could recall (leaving aside academic complications) indicated that the monetary aggregates should grow more or less in line with nominal GNP, not by a multiple of them.

I got out several Central Bank reports one day to try to understand how this credit was being created. Finding what you want in these reports is, at least for me, quite difficult but I finally came to the conclusion that the Irish banks borrowed from abroad between €100 billion and €200 billion in respect of their Irish business. I was so astonished that I asked one of my colleagues to check this figure and he agreed that it appeared to be correct.

Do read it to the end!!!

– Peter Curran notes that the crisis has little to do with the national independence, but incompetence in government

– Cedar Lounge on the latest poll ratings from Red C… note there are now just 6 points between Sinn Fein and Fianna Fail

– Speaking of which there’s a nice, tightly observed piece from Alex Massie, which examines that poll and asks: could this be the end of Fianna Fail? Answer, probably not:

Since Fianna Fail is nothing if it’s not in power one wonders just how it will behave if fewer than 40 of Dev’s great-grandchildren are returned to the Dail next year. The party – the “movement” (cease your chuckling) – is not bred for opposition. What, then, is the point of Fianna Fail?

Political parties do die. It’s not impossible that this could be the end of Fianna Fail though, if truth be told, this may prove an overly-optimistic view. They are the Irish Undead.

– A *very* thoughful piece on the importance of narrative and the challenge for the opposition if they are to be effective in government, from Jason O’Mahony (do read it all, or you won’t get today’s title):

…we’ve never had a Labour government. Now, I’m not a fan of Labour. I think they are anti-business, in hock to the public sector and the unions, and regard people who actually create jobs and wealth with suspicion.

But I’ll tell you one thing about Labour: they have a story and a direction and maybe even a picture of what it is they want to do. They do not measure themselves as The Not-Fianna Fail Party. And maybe, just maybe, Labour are smart enough to realise that this is an Indiana Jones grab your hat from under the closing stone wall moment to reach out beyond their comfort zone, to entrepreneurs, to employers,  to businessmen and women who can make a profit AND treat their customers and employees decently.

– And Dan replies:

Fine Gael have articulated over the last few years a reasonable set of policies in respect of the public finances and Irish life and has made efforts to address the problems associated with unemployment. Some of those policies are inconsistent, some areas are lacking and I personally disagree with party policy in a number of areas in the short and longer term. Yet unless there is the ME party out there made up of clones of mine that subscribes only to policies that I agree with then I’m never going to find a party that I share 100% congruence with.

– Meanwhile in the financial world, Constantin notes that contagion is already in train in the wake of the bailout…

– And already getting serious for Spain by the looks of it…

– Joe has his usual round up of headlines in the British press…

Mick is founding editor of Slugger. He has written papers on the impacts of the Internet on politics and the wider media and is a regular guest and speaking events across Ireland, the UK and Europe. Twitter: @MickFealty