Irish Government tough on fiscal policy; weak on dishing it out to the banks

P O’Neill with a sharp observation of the Irish version of mañana, or ‘don’t do today, what you can do tomorrow’. Think of those late agriculture, regional development, education and OFMdFM draft budgets, if you’re getting all nordie and smug.

But in the maelstrom of the Republic’s economic crisis, the consequences have been catastrophic, not least in the government’s ‘unaggressive’ dealings with the banks… He quotes Lorenzo Bini Smaghi, a member of the ECB:

“Markets waited and waited and since they saw no policy reactions they started to lose confidence in the course of the summer. Remember there was a downgrade – in August – but there was no policy reaction, no announcement that a tough budget was in preparation and no announcement of the measures. The loss of confidence also affected the banking system and this created a spiral which led to the crisis and in the end the request for financial assistance.”

The dilemma for Irish voters will be deciding which (if any of the Opposition parties) have the capacity to avoid a further series of mañana responses, in order to hypothecate electorally challenging decisions…

Don’t hold your breath….

  • The Word

    No doubt P O’Neill is just destroying Sinn Fein’s political strategy yet again.

  • wild turkey

    “the governments unagressive dealings with the banks”

    wait a minute mick, there is a fundamental principle at stake here. it is this

    The Essential Guide to Gombeen Etiquette and Politeese clearly states that is of fundamental importance to be polite, friendly and ensure the craic is good with ones golfing friends and political funders and associated zipper lickers.

    now WTF would Lorenzo know about Gombeen etiquette? Forenoors. FFS

  • Greenflag

    Can anyone name a single western government that has had the temerity to stand up to the banks in the past five years ?
    Once upon a time USA politicians were all screaming the ‘banks ‘ are too big to fail and now with the banks that were too big to fail even bigger there is hardly a peep from the politicians . Ireland is not alone in having a gutless government .Just look at how the UK /USA are coping with the huge bonuses being paid out to bankers while millions are thrown onto unemployment lines and corporate profits increase ?

    The people in western countries might as well dispense with their so called elected governments and just appoint the bankers and representatives of international bond traders and multi national corporations as their as their oligarchies 🙁

  • Ireland is not alone in having a gutless government .Just look at how the UK /USA are coping with the huge bonuses being paid out to bankers while millions are thrown onto unemployment lines and corporate profits increase ?

    From a UK perspective:-

    On bank insolvency, there decision as to whether or not to let a bank go bankrupt is a matter of balance. There is not a hard and fast rule which says that all banks should go bankrupt. It really depends on the size of each category of its banking business, the size of its net indebtedness relative to the size of its busines, the prospects for an increase or decrease in value of its assets and the degree to which its demise would affect the economy as a whole.

    There is also a balance to be struck in dealing with banks who pay bonuses that are unacceptably large. The UK has an interest in preserving the City of London’s reputation as a leading financial centre and to keep those businesses there. Punish the banks too much and those businesses leave with resulting higher unemployment. The Government can therefore only afford to tackle bank bonuses to a limited level.

    Probably the correct way to tackle excessive bank bonuses is to obtain international agreement.

  • The Word

    “The people in western countries might as well dispense with their so called elected governments and just appoint the bankers”

    “Probably the correct way to tackle excessive bank bonuses is to obtain international agreement.”

    The above positions are probably a fair reflection on the crisis we have in the west.

    The nation state has died in recent years because of the “money markets”. There really is no alternative for pooling sovereignty in the EU sense on an international basis so that these markets are tamed.

    Common rules are one thing, but unless we recognise that these markets simply play one nation off against another so that, as Gordon Brown would say, there is a rush to the bottom, the lowest common denominator that satisfies their money lust.

    One world government, whatever the fears of this from the Christian right, is the rational way to deal with this otherwise uncontrollable destroyer of the values of human beings.

    Taming Money leaves humanitarian values in the ascendancy. We return to being what we are, empathetic beings, in charge of our planet, not people oriented by the never ending misery of those who talk through money.

    Today, I may be only one, but tomorrow is another day.

  • aquifer

    FFail think it is their job to be in government, not to do the job of governing. Gassy statements of the obvious bereft of any intent to tackle the problems facing the nation. They bide their time and try to let time and external pressures take the decisions.

    Like imposing huge property taxes as the only way of making any sense of the bloated valuations they are underpinning to prevent the banks going bust.

  • Greenflag

    @ seymour ,

    ‘On bank insolvency the decision as to whether or not to let a bank go bankrupt is a matter of balance.

    I’d have said at least in the past few years more a matter of fear – not so much at individual bank insolvency as at societal wide financial mayhem and disorder brought about by the entire banking system coming apart . Thus the USA Congress’es 700 billion bail out in 2008 and the UK’s rescue of RBS and Northern Rock and Ireland’s Anglo Irish /AIB/BOI taxpayer’s and ultimately IMF/ECB lifebelts.

    ‘Probably the correct way to tackle excessive bank bonuses is to obtain international agreement.’

    That may be but is it even a remote possibility ? Listen to John Christensen of the Tax Justice Network (link below) answer the BBC Reporter’s questions as to why the British Government tolerates tax evasion haven’s in the Channel Islands , Isle of Man and the Cayman Islands and other Caribbean tax free zones -thus depriving itself (HMG) of much needed revenue . It seems that British banking needs it’s offshore tax havens in much the same way that Switzerland needs it’s ‘secrecy ‘ laws .

    According to Christensen the much hyped clampdown on tax havens promised by the international bankers at Davros has amounted to a farce .

    Those who believed in the past that the banks will of their own accord ‘reform’ their worst practices must by now have second thoughts or else they have switched off their thinking facility .

    The bonus issue is just the tip of a huge ‘banking ‘ iceberg which will sooner or later have to be faced down by the world’s remaining democracies or else the eventual economic and political fall out will submerge those democracies under some form of totalitarian extremism .

    ‘The UK has an interest in preserving the City of London’s reputation as a leading financial centre and to keep those businesses there’

    Of course and I understand the City of London is the last remaining jewel in the economy and was supposed to lead the UK economy back to at least a vestige of former glories. In 1851 Britain (including Ireland ) had 1.6% of the world’s then population but produced half the world’s coal and iron, controlled nearly two thirds of world shipping and engaged in one third of all world trade . Virtually all finished cotton in the world was produced in British mills on machines invented and built in Britain. London’s banks had more money on deposit than all other financial centres of the world combined .

    Perhaps the UK Government needs to look at some other avenues other than the ‘City’ as it’s path to recovery

    In 2011 I read this morning that China now lends more to the world’s rapidly developing/emerging economies than the World Bank with Russia , Brazil , Venezuela and even India being major recipients . London also must compete with New York, Shanghai , Frankfurt and no doubt in the coming decades even more emerging financial capitals .

    Perhaps the UK Government needs to look at some other avenues other than the ‘City’ as it’s path to recovery

    In 2011 I read this morning that China now lends more to the world’s rapidly developing/emerging economies than the World Bank with Russia , Brazil , Venezuela and even India being major recipients . London also must now compete with New York, Shanghai , Frankfurt and no doubt in the coming decades even more emerging financial capitals .

    In 2011- I read this morning that China now lends more to the world’s rapidly developing/emerging economies than the World Bank- with Russia , Brazil , Venezuela and even India being major recipients . London unlike in 1851 must compete with New York, Shanghai , Frankfurt and no doubt in the coming decades even more emerging financial capitals .

    Perhaps the UK Government needs to look at some other avenues other than the ‘City’ for the path to recovery and the ‘Big Society’ ?

    http://www.bbc.co.uk/news/business-12205690

  • Greenflag

    Apologies for the above couple of replications /triplications .
    My editing went haywire 🙁

  • Greenflag

    @ word,

    ‘We return to being what we are, empathetic beings, in charge of our planet, not people oriented by the never ending misery of those who talk through money.’

    Would you give over your oul guff ;(

    Would you include this institution in your ’empathetic ‘ new world order ?

    http://www.npr.org/2011/01/18/133015611/vatican-warned-irish-bishops-not-to-report-abuse

    Canon law is the clerical equivalent of banking laws -there for the protection of the Vatican institution and it’s hierarchies.

    Not much empathy then for the ‘victims’ of clerical and episcopal abuse 🙁

  • Brian

    If the dissidents wanted to do something they should put a scare into these bankers.

  • Brian

    GF

    Canada seemed to have it’s bankers under better control than the rest of the West. They are certainly one of the exceptions and not exactly a heavyweight

  • Greenflag

    @Brian ,

    Seemed -however all may not be well with Canada’s housing deferred bubble as per this Max Keiser report . The ‘Canada ‘ update starts at 13:40 into the link.

    http://www.businessinsider.com/canadian-housing-bubble-2010-12

    ‘If the dissidents wanted to do something they should put a scare into these bankers.’

    The bankers would have the dissidents for their breakfast if push ever came to shove .

    Only ‘financial activism’ implemented by a large number of democratic electorates worldwide ON their governments and ON targeted ‘markets’ will make a discernible difference and we are not there yet and probably won’t get there until there is another global meltdown .

  • Greenflag

    Here’s Stoneleigh Foss the Canadian lady interviewed above in a slightly more ‘meltdown ‘ mood .

    http://www.youtube.com/watch?v=v-geWu-E9ys

    There is still a lot of hype being put out by the mass media that the ‘recession’ has ended in the USA . However if the unemployment figures were counted as they were back before Bill Clinton took office the USA current rate would be almost 22% instead of the oft quoted 10% . The number of foreclosures this year is expected to reach 5 million and the robo signing foreclosure scam – now hitting bank shares -slowed down the number of foreclosures last year .

    Meanwhile the USA stares down China in the high stakes world reserve currency standoff while the rest of the G-20 have no idea whats next for the world economy and more particularly their eh ‘currencies’ ;(

  • Brian

    GF

    Thanks for the link. I had no idea that was going on in the ’51st state’ as my friends here sometimes call it.

    Foreclosures will be higher this year than last according to everything I’ve read as you say. What a disaster, with plenty of blame to go around.

    Regarding the recession being over, technically it is over going by GDP but many are still suffering and unemployment remains stubbornly high. I live in DC so our area is somewhat immune to economic downturns due to the number of people working as Fed contractors, Feds,etc. (8 of the 10 richest counties in the US surround DC) but I still have several friends who have been laid off.

    I have a hard time believing that 22% number though…do you happen to remember where you read that?

  • Greenflag

    @ Brian ,

    To get the gist of the issue listen to the first 6 minutes of the Keiser Report.

    http://www.businessinsider.com/canadian-housing-bubble-2010-12 above and at about 4 minutes in Stacy Herbert brings up the unemployment chart ‘

    Alternatively you can see this chart on John William’s http://www.shadowstats.com which is website aimed at uncovering the truth behind some important statistical government economic indicators such as the actual unemployment and inflation rates as opposed to the ‘official’ numbers hyped in the mass media .

    If you are living in DC then you are of course somewhat immune to feeling the effects of whats called the ‘real ‘ economy that most Americans deal with . A bit like the folks of Dublin 4 or London’s Chelsea & Kensington or the stockbroker belt to the south/south east of London.
    I’m sure the income gap in DC between the ‘haves’ and have nots’ is probably outside of New York one of the widest in the world .

    I can understand your reluctance re the 22% .It may be a little over but the truth is probably between the U6 figure (over 15%) and the 22% and probably differs significantly between states .

    As for bankers and JP Morgue ( Keiser’s humour) looting from the people in recent days we’ve the people of Tunisia have had their Central bank ‘looted’ of 1.5 tons of gold valued at some 60 million dollars by the wife of the President recently deposed . He is now in Saudi Arabia which is of course one of the USA’s biggest Allies in the Middle East .

    As you are in the DC area do you think you could collar one of those Senators or Congressmen and ask them nicely if they could put some pressure on their good buddy King of Saudi to return the gold to the people of Tunisia ;)?

    I mean this kind of thing could get out of hand -stealing actual gold from national treasuries . Makes the Wall St and financial services sector methodology of stealing billions worldwide by means of worthless paper look positively like child’s play 😉