The “real question” the election is ducking

The Irish election campaign is being fought on  depressingly traditional lines, some breast beating here, a few bribes there,  and tactics all the way. Exciting enough if you like that sort of thing, but new politics, hardly.  In the FT, Michael O’Sullivan,  author of Ireland and the Global Question defines what he says is the real question which the politicians won’t face. Part One of the analysis seems to be agreed but part Two seems to be discussed only in the comment columns. Why is this so? Perhaps because like me, most people haven’t anything like enough knowledge to come to a view. So they’re forced to operate on instinct by giving the other guy a chance at governing.
What’s more, ideas for “a new Republic “ are easier to grasp on the surface but risk imposing overload on people who need to tackle the debt burden first. A single year’s’  “ people’s convention” as promised by most parties is too short a period for reforming the State, when the clash of interests begins.

From O’Sullivan’s article

In the bond markets, Ireland’s error has been to take bank liabilities on to its national balance sheet. By then connecting this with entry into Europe’s bail-out fund, the country has set out on a road to serfdom, in which the scale of indebtedness is now likely to smother growth and curb policy flexibility. This week’s election ought to be about how to turn off this road, not how long it should be. Yet Ireland’s national debate still focuses on how to fund debt, rather than how to end insolvency.

A wholesale restructuring of national debt is the only solution.

A better path would see a managed restructuring, so the debt burden no longer rests just with the Irish taxpayer. Such a restructuring could include moves like an extension on debt maturity, while restructured debt could be backed by a pool of eurozone assets, or the exchange of euro bonds for Irish debt. However it is done, the aim would be to reduce the burden to the point that the repayment of outstanding debt is no longer a market concern. A plan engineered in collaboration with the European Union could also involve other troubled states, like Greece.

All this seems unthinkable to Irish voters, and thus undoable to our politicians. This is in part because no advanced country has defaulted for a generation.

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  • Old Mortality

    ‘All this seems unthinkable to Irish voters, and thus undoable to our politicians. This is in part because no advanced country has defaulted for a generation.’

    Is it a matter of national pride? Perhaps Ireland needs to stop thinking of itself as an advanced country. Its grotesquely inflated appetite for property investment suggests the contrary

  • wee buns

    ‘This week’s election ought to be about how to turn off this road, not how long it should be. Yet Ireland’s national debate still focuses on how to fund debt, rather than how to end insolvency.’

    After tonight’s debacle of a debate between the tree blind boys of banana republic, we can rest assured that nobody knows what they are doing or why.
    We saw in the lead up to the (2nd) Lisbon referendum, how cynically debate was deflected, with information leaflets on content being tucked away in inaccessible ‘distribution’ points in favor of being inundated with posters sporting simplistic, irrelevant nonsense.
    Similarly the dumbing down of whole question of debt restructuring & crisis within the euro itself, doesn’t arise from the electorate finding the issues ‘unthinkable’ (on the contrary most people display a grasp on the reality) as much as it stems from the politicians desire to stymie debate which may have resulted in the public demanding a referendum on the bailout.