Getting to the economic truth

WHEN the decision was made to bailout the banks in 2008, a set of events was set in motion, which are still having massive repercussions today. This is obvious of course but I say it because it sets the time scale for what is the following question; has anybody figured out fully what exactly is going on?

WHEN the decision was made to bailout the banks in 2008, a set of events was set in motion, which are still having massive repercussions today. This is obvious of course but I say it because it sets the time scale for what is the following question; has anybody figured out fully what exactly is going on?
There are constant stories of hardship and suffering. Twenty thousand people are in arrears of two years or more on their mortgage, many thousands more are emigrating and of course, carers are being hit yet again. These give us a clear understanding of the levels of pain being endured by people all over the country but the airwaves and newspapers are filled with endless speculation as to what is actually going on and whose fault it is. Of course, such a situation cannot readily offer solutions, meaning simply that the pain will continue for some time to come.
On many occasions over the last number of years, we have been told by politicians that perhaps a deal might be forthcoming in Europe with regard to the infamous promissory notes, which are such a noose around the nation’s neck. We are at just such a point again now but until an announcement is made, we will have to sit tight and wonder what is happening behind closed doors. David Hall from Dublin has taken a case to the High Court with regard to the €30 billion promissory notes, which is due to be heard in January. The implications of this case may be far reaching or they may not we have no way of telling. It certainly is an interesting case and one I think is worth taking but what a ruling in his favour might mean for the rest of the nation is difficult to foresee. Suffice to say there will be implications.
It is just one more aspect of this whole situation, which not only remains to be seen but is difficult to assess. Almost without exception, the various experts, who speak on the issues relating to the crisis, offer not only different opinions but different solutions as to how it can be resolved. This is not a criticism of them or their expertise but more an indicator of the complexity of the issues and the difficulty in finding solutions.
Our negotiators have been criticised by many people, myself included, for their failure to secure better terms for Ireland from the EU. It is easy to sit on the sidelines and criticise but the longer this goes on, the more I am inclined to feel there is something more to this than a simple failure to negotiate. Perhaps there has been little or no negotiation but we have been given the impression by the Government that there is hope when there is not. Again, this is an example of the difficulty of making assessments, predictions and formulating solutions when not in possession of all the facts.
It is this, more than anything, which has led to much of the deserved criticism of the Government over the last few years. They are in possession of all the facts and yet they seem to lack coherence in their ability to address the problem. There is no doubt that they are caught between a rock and a hard place with regard to the different approaches of the ECB and the IMF. The IMF has stated again recently that if Ireland’s growth rate is slower than expected next year then austerity measures in the form of budget cuts can be postponed until 2015. The ECB has taken a more aggressive stance, however, and it does seem unlikely any great help will be coming from that direction any time soon.
One thing I feel is a good indicator of what is coming down the line for Ireland is the fact that one bond manager, Michael Hassentab, holds 10% of Ireland’s debt in the form of assets of $158 billion. This is clearly a man who is confident that whatever happens in the future it will not have negative consequences for those in the private sector with the cash to buy Irish debt. He has been fulsome in his praise for the Irish Government’s willingness to impose austerity. He told City Wire, “What’s been happening in Ireland is positive. The country, despite facing great adversity, continues to make progress on fiscal reform, and is increasingly getting recognition as a model for other countries.”
While Mr Hassentab might feel what is happening in Ireland is positive, the people living there might take a different view. As long as the Government continues to impose austerity, his profits will increase but the implications for people’s lives in Ireland are grim to put it mildly.
Perhaps, as we near the end of the year, all we can hope for in the coming 12 months is for a clearer picture to emerge of what exactly the future holds and what, if any, options Ireland has to take steps to improve people’s lives. It is disheartening to be starting another year in such rag economic order and really no closer to knowing when the ordeal will end. The Budget brought bad news so perhaps all that can be guaranteed is that the pain will continue for some time to come. In such uncertainty, it is difficult for people to raise their spirits or generate initiative. Similarly, the continued failure of the banks to provide finance or forgiveness is acting as a retardant to recovery. While an overarching solution might be difficult to conceive, there are certainly a number of smaller measures which could make people’s lives just a little bit easier. At a time like this, every little helps.