Who to blame for austerity and bailout?
Sir, – Derek Scally tells us that Germany’s role in the Irish bailout was not criticised by a prominent Irish politician who was in Berlin recently (“Donohoe declines to criticise Germany’s role in Ireland’s bailout”, Business, November 27th). The implication seemed to be that Germany’s role in the Irish bailout should have been criticised.
The facts of the case seem to be that Ireland’s most powerful citizens in charge of government and financial institutions made reckless decisions which resulted in a spectacular collapse.
The consequent bailout was financed by our fellow EU member states.
Blaming the people who bailed us out for what happened is a bit hypocritical. – Yours, etc,
Sutton, Dublin 13.
A chara, – A senior German economic adviser thinks EU imposed austerity was too harsh on Ireland (Derek Scally, Front page, November 26th). Indeed he thinks austerity obsession in Germany will damage Germany too.
In our case its fairly obvious what the problem was. That was that we never had a public expenditure crisis because our public expenditure was never very high by EU standards. Our problem was we had a revenue crisis. The collapse of revenue from CGT and other property-based taxes left a huge deficit which would have reduced without brutal austerity. That’s because a large part of the deficit was to pay for capital programmes which are by definition of limited duration. In addition, in the year of the largest deficit we handed over multiple billions to “help out” the banks who later turned out to be lying about the scale of their problems.
We were also putting €2 billion annually into the National Pension Reserve Fund. Again, something that could have ended without any of the cruel cutbacks that damaged so many lives. We were not “partying”. But we had had governments, influenced and ideologically dominated by the Progressive Democrats, which slashed income taxes, reduced CGT rates and, when the crash came, left us without sufficient revenue to fund modest levels of public expenditure.
This was the Labour Party analysis in opposition.
Unfortunately they reversed that in government. Thus the 2011-2016 austerity did not cause the recovery. It delayed it. And the crisis was used to procure cuts that had nothing to do with short-term austerity and lots to do with long-term ideology. The biggest of those was in the public service pension system. If the EU had been less brutalist, if the ideology had been different, the recession would have ended earlier and untold human misery would have been avoided. – Yours, etc,
Sir, – What a pity Prof Christian Kastrop didn’t speak up when he was in a position to do so! – Yours, etc,
Sir, – We read with interest your headline “Ireland hit with too much austerity, says former German official”. So, its now official! Something many of us knew for over 10 years. Ireland has been screwed. A broken health service, a higher education system in tatters and a housing crisis. Homes lost, families destroyed and a bailout for the “pillar” banks. The only reason the EU is supporting Ireland in the Brexit debacle is because of a fear of EU implosion. Where are your friends when you need them? – Yours, etc,
SHAUN & BRENDA
McCANN, Dublin 8.