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  • irishtimes.com - Posted: February 23, 2011 @ 6:14 pm

    Wise Analysis of Our Woes

    Deaglán de Bréadún

    Plenty of common sense in a piece today by the distinguished commentator Martin Wolf . He sets out clearly and concisely the background to our economic woes and the high price ordinary people are paying for sins they did not commit.

    He shows how the property bubble developed, only to burst in smithereens all over our lap, leading a “panic-stricken” government to guarantee bank debt in September 2008.

    A new government’s freedom of action is limited: “Ireland is doomed to fiscal stringency for decades, given its poor growth prospects, at least in comparison with its Tiger years.”

    There should be a reduction in the rate of interest on Ireland’s borrowing and, more importantly, a writedown of existing subordinated and senior bank debt.

    The European Central Bank and the EU partners have vetoed a writedown, for fear of “contagion” in other member-states. But Wolf argues that for taxpayers to bail out senior creditors of massively insolvent banks at such risk to the solvency of the State is ”both unfair and unreasonable”.

    The new government should “firmly” make the point that, if the rest of the EU wants to protect senior creditors, then it should share the cost of doing so. Irish taxpayers are being penalised for the behaviour of private lenders and borrowers.

    There may be a way of getting access to this Financial Times piece on www.ft.com and the heading is, “Ireland needs help with its debt.” I need hardly add that our own paper has also had truly excellent economic and financial coverage and analysis of the crisis, from colleagues such as Dan O’Brien, Simon Carswell and others.

    Looking back on it all now, I was telling a friend today about a house belonging to a relative in a Dublin suburb which sold for 57.5k Irish punts in 1994 and was then being re-sold ten years later at an asking price ten times that figure.

    Another memory that stands out from that time is of a middle-aged woman ahead of me in the queue at the Thomas Cook travel agency which used to be on Grafton Street. She was buying a foreign holiday for her nurse daughter and policeman son-in-law, because the money they had raised was insufficient for a deposit on the modest house they wanted. 

    Speaking in a Newstalk radio discussion shortly afterwards, I made an observation along the lines that, “If house-prices are gone so high that a Garda and a nurse cannot afford a down-payment on the modest residence they want, then we’re in trouble.”

    Then there was the debate, completely mad in retrospect, about stamp duty in the last general election of 2007. Hard to think of anybody who emerges with much credit out of that.

    The more one hears about the last days of the outgoing government, the more it appears like a broken reed, demoralised and no longer capable of dealing with a situation that was spinning out of its control.

    A new administration, whatever its composition, will at least be fresh and new and have the energy which had seeped away from its predecessor. The public is prepared to give new faces a chance but will be expecting results in fairly short order.

    My prediction, while I’m at it is that Fine Gael will have enough seats to form a single-party government, possibly with the support of Independents. However, the party may decide to go in with Labour anyway, for the sake of “stability”.

    This is new territory but, then, the situation is entirely unprecedented.

    • Bellminx says:

      Micheal Martin is light years, I repeat, light years, ahead of Enda Kenny and Eamon Gilmore – and somebody should tell Enda Kenny that it’s the year 2010 – it is as though he has just woken up from a deep freeze where the “Freestaters” kept him in deep refrigeration since Dev took over in the 1930’s in the hopes that the time would come when Fine Gael could one day get their revenge blah blah. We know from history that that lot would sign and say anything to get their mitts on power. God help us.

      Anyway the Primetime Leaders’ debate was another RTE flop – marginally, I repeat, marginally less boring than the Frontline fiasco and I completely understand Micheal Martin’s frustration during the Primetime debate, which apart from utter frustration with FG/Kenny (in particular) and Labour/Gilmore’s lack of clarity on economic issues (and everything else in fact) was more to do with a typical RTE personality grating on his and all our nerves (that drawling accent ugh!). I’ll say it again and I’ve said it before, the TV3 debate (sans Enda) with VinB and the TG4 debate (all three leaders) with Eimear Ni Chonaola and the TV3 debate (just Micheal Martin) with VinB was TV worth watching and speaking of polls, all things being equal (or not) they’re really just there to amuse us and how wrong or right can they be? But seriously a poll should be done on, if given a choice, which TV station would citizens prefer to pay their TV licence to. Not RTE, I’ll bet.

      All this talk of “change” is nothing more than an appeal to people’s capacity for entertaining the whimsical when the absolutely prudent thing to do at this time is to stay with Fianna Fail’s four-year plan for recovery. It is the only thing that makes sense and I am absolutely certain that recovery under Fianna Fail will be a heck of a lot less “painful” that what will (eventually) come to light in FG’s many-pointed plan and whatever Labour has up its sleeveeen.

    • Ted says:

      “This is new territory but, then, the situation is entirely unprecedented.”

      Only if Labour were to refuse to go into coalition and become the major opposition party. Then we’d really be in new political territory with an entirely unprecedented realignment in the Oireachtas.

    • derek says:

      Somebody should wake Bellminx up and tell them it’s 2011!!!

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