Sir, – John Meehan (August 25th) agrees with my central argument when he writes that "the impact of budgets was admittedly relatively severe on the bottom 10 per cent". Is that not the greatest failure of any government, especially in the most difficult times?
The recession of itself did indeed have massive impact, but that is precisely because government policy did not sufficiently ameliorate it for the most vulnerable.
Dr Rory Hearne's article "Despite recovery, Ireland remains a hugely unequal society" (Opinion & Analysis, August 25th) details the impact of the recession on low-income groups, especially women and children, and despite Mr Meehan's dismissal of the Nordic model, he also notes that these countries "have pursued a more regulated social economy model resulting in greater equality and lower poverty" and their experience is therefore very relevant to Ireland. These economies represent a middle ground between unrestrained free markets and a centrally planned system.
I will not quibble over the exact amount of the bank bailout since even the lower figure, €40 billion, is really huge in the Irish context. However, despite its threats, the European Central Bank could not have refused to maintain liquidity for the Irish banks and allowed them to collapse. It is the European Central Bank and that is, quite simply, one of its core functions, as it is for any central bank.
Furthermore, the ECB was determined to avoid a euro crisis and would have taken the steps necessary to avoid it. The Irish financial system owed German banks about €42 billion, the UK about €19 billion and the French about €12 billion. How would they be repaid if the Irish banks were allowed to fail? In the end, the Irish government socialised private debt and did the job for it, even paying out €3 billion to unguaranteed bondholders when the ECB pressurised it to do so. – Yours, etc,
DONAL McGRATH,
Greystones,
Co Wicklow.