I will be on RTE Televisions Front Line programme this Monday, Oct 11th 2010, 9:30pm after the News.
We simply cannot afford to pay the cost of the bank bailout along with reckless government spending, writes Eamonn Blaney
THERE is so much talk of doom, gloom, builders, bankers, billions and going bust that it is very easy to lose sight of what it actually means for you and your family, in simple ‘apples and oranges’ terms. Nevertheless please bear with me, while I try to tease out the figures and put them into some meaningful context.
At the moment there are 450,000 people without paid employment out of a workforce of 1.9 million. Also consider that 460,000 of the total workforce do not compete for jobs or are in any danger of losing their jobs because they are our public servants. So, in the real world, the actual number of people available to work (or be made redundant) is 1,450,000 people. I’m sure even one of our overpaid bankers could work out that 32 per cent of the people in the “free labour market” are without jobs. That’s right folks, the real rate of unemployment in this country among the wealth-creating sectors is 32 per cent or one in three.
I am not an economist, accountant, or a public servant but whatever way you look at it, 32 per cent is not the same as the claimed 13.4 per cent. The reason I bring your attention to this figure is that the only way that we can ever possibly get ourselves out of the present financial crisis is by creating wealth. By definition, the public service does not create wealth. In fact, a lot of its function should be to assist in the creation of wealth. But this is rarely the case as any small business owner will tell you.
The harsh reality is that a third of the people who are expected to get us out of this mess are sitting at home, mostly unproductively and with little hope of paid employment. This is an outrageous waste of our most precious resource, which is an educated and capable workforce.
At present, the National Debt is €104bn, on top of which we are going to add a possible €50bn more as a result of the bank bailouts. €154bn divided by the one million productive people in this country means each of you with a job in the private sector now has to repay a debt of €154,000. I am not playing games with the figures; this is the stark reality which faces us.
It gets worse, much worse. At the present rate of spending, we are adding approximately €21bn to the National Debt each year, through government overspending. By the end of 2012, if this Government carries on, we will collectively owe €200bn. In simple terms, that’s €44,500 for every man, woman and child in the country. Or if we allocate this simply to the people who have jobs, including the existing 460,000 public servants, this equates to €133,343 for every worker in the country.
Minister Micheal Martin, when he was interviewed on NewsTalk 106 recently, suggested that our debt was “manageable”. When pressed to explain manageable by presenter Ivan Yates, the minister replied that “the Central Bank had said it’s manageable”. Who will take the blame if he is wrong, I wonder?
He went on to say that Fianna Fail intends to have public spending under control in the “next few years” and that we would reach the three per cent budget deficit, as demanded by the European Union. This means that we only spend three per cent more than the total amount that we take in “in the next few years”! As this is not going to happen, let’s pretend what he really meant to say was the next 10 years. What would be the implications for you and your family?
Well, to find out how that will affect you if you are a worker, simply take €133,333 and divide that figure by 10. That’s right, you are going to have to fund in excess of €13,000 every year for the next 10 years and that is just to stand still. Or, put another way, that’s approximately €250 a week out of your present pay packet.
Now the question you have to ask yourself is whether you can afford this? If you cannot, then the burden of debt repayment will be placed on your working neighbour, only by this time the figure will increase because you and the unemployed cannot pay.
In February 2009, I posted a graph on www.Eamonn Blaney.com, showing estimates of what I thought the National Debt would be up to 2012. It took me an hour with a calculator and a couple of figures from the Central Statistics Office to do the sums.
As frightening as my forecast was then (February 2009), it is far worse now. Yet, the Department of Finance’s own figure has proven even more inaccurate than even my amateur attempts. What in the name of Zig and Zag do they do in there? Questions really must be asked about the role of this department. At the rate it is going and for all the use it has been to us, it should be renamed the Department of Economic History. What did they tell then Finance Minister Brian Cowen about the banks’ cash reserves in 2008? Maybe we’ll leave that for another day . . .
The situation is simple. Mr Lenihan, we, the people, simply cannot afford to pay the cost of the bank bailout. There is talk of the budget cuts being in the region of €3bn, or maybe higher (it will be, trust me on this), while the reality is that we are paying €8bn pa in debt interest already. In simple ‘apple and oranges’, that means one euro in every four euros of total government revenues will go on paying just the interest! Without a substantial reduction in government spending, it simply cannot go on.
If Fianna Fail and the Greens think that we are going to wait another two years while we plunge into debt for another €50bn, they are badly mistaken. We must refuse to pay the investors in Irish debt as they knew what they were doing, and deserve to lose out.
So Mr Lenihan and Mr Cowen, I respectfully request that you consider the reality of the figures and tell us in plain English what you intend to do now, and stop playing politics with our lives. You should be a little bit less concerned about our reputation abroad and really start concentrating on what the people whom you are supposed to represent think of you and your inaction to date.
We must make the right decisions now while we still have a fig leaf of sovereignty left, and more importantly, before either the European Union or the International Monetary Fund make the tough decisions for us. Personally I think that it is too late and that the doomsday scenario is upon us and the Government knows it but will not say.
The EU is sick and tired of little countries like ours having a disproportionate say in their European Integration Project and they need to control us now. We have become a nuisance to them. The game is up for our little country unless each of us has the courage to take a stand and refuses to bow down before the present incompetent and complicit Government and the sinister anti-democratic plans of its EU masters.
It’s up to each of us now, to decide whether we are going to lie down or stand up. What will you be willing to do to save your country from an economics-led invasion?
Scary. Very scary!
apples and oranges is a top class article . This type of article would educate us all with understandable language. Keep it up .Keep it short and simple.Thank you .
Nice article. Your continued focus on FF’s manipulation of the figures makes for good reading.
What is surprising is FF’s insistence that 1 – things are under control and 2 – their policy of saving the banks is the correct route and 3 – they, FF, did little wrong. Unfortunately FG cannot offer good opposition government at this time as the figures involved are simply too high and it’s possibly beyond the comprehension of their financial gurus.
The banks on the other hand with all their MBAs, CFAs, ACCAs and BLs orchestrated this tragedy single handedly – but for all their diplomas and degrees they can’t orchestrate a rescue. The elected politicians created banking legislation & guidelines in co-operation with these learned educated bankers over the years. These guidelines were then progressively abandoned in the past 3-5 years and the ill effects of the foulplay were then hidden from auditors, watchdogs & politicians in subsequent annual and quarterly reports.
I don’t blame any politician for the greed filled acts of the bankers. Dick Roche has a silly moustache, Mary Harney has a weight problem, Brian Cowen is no model, Enda Kenny is desparately dull when talking – but they were elected based on their popularity in a democratic process for a 4 year period. I wouldn’t think they went for election so that they could oversee a huge white collar crime.
But who would have imagined that senior bankers could conceive such cover ups. Sean Fitzpatrick, Colm Doherty etc all conceived cover-ups that have been uncovered? It is incredible that there are 9 or 10 individuals with personal loans amounting to over EUR1Bn each. Bankers are supposed to be self-regulating – they lied, they covered up, and their only rescue plan is to keep their banking show on road and have the tax payer bail them out.
DMcWilliams is of the opinion that we should remove ourselves from the EURO, burn all or most of the bank bond holders, and possibly leave the EU. I tend to agree with him however I don’t know if Ireland could handle the fallout. Ireland is not an independent country with regards to utilities, food, natural resources, dependent on EU handouts etc. We have no national strategy to become independent. If we drop from the Euro many businesses will become uncompetitive as the Punt finds its feet. Burning the bond holders will result in Ireland being black balled by the international banking and credit community. Leaving the EU would have the effect of isolating Ireland from the many export markets & from attracting inward investment. McW’s proposition is radical and hard to forecast.
Your opinion is that it is all too late and that the government are too chicken to admit it. So if it is too late what would you advise the government to do next?
Thoes Irish citizens that held bank shares have been wiped out and there are many thousand of them. Those foreign Bondholders are being accomodated, we’ll make sure you are ok boys (Mr Abramovich!) We need totrun to Barak Obama and ask them to buy Ireland, make us the 51st state. Think of all the advantages that would go with this proposal! Under the wing of the US is far more preferable than being under the wing of the IMF whic we will be within 18 months. I’ve heard nobody debate this point!