Stop Brussels elite from ransacking our country
OPINION:We must face down the jackals who control the international banking system to save our nation and protect our children’s future
THERE IS considerable truth in the view that Ireland is no longer a sovereign state but an impoverished suburb of Brussels. Four million people are mired deep in a collective debt that is not of their own making, while persons unknown decide just how much more we “owe” and the terms and conditions under which this ever-expanding debt must be repaid.
We have lost control of our finances, have only a marginal role in determining the key parameters of public policy, and are being compelled by international institutions to hand over our national assets at fire-sale prices.
At least the Vikings focused mainly on coastal areas, but their latter-day counterparts are ransacking the nation from end to end. And unless we stand our ground – a modern equivalent of the Battle of Clontarf – they will take everything that’s worth taking.
The state of denial that prevails nationally at present was an intrinsic part of the mindset in the Department of Finance during the period 2000-2008. The idea that anything might happen that could throw our booming economy into a tailspin was simply anathema – as was anyone who dared to entertain such views.
Between June 2004 and November 2005, I circulated seven papers to a number of well-placed senior managers in the department, alerting them to a range of geopolitical factors that could have a sudden and highly detrimental impact on the Irish economy. These were not short opinion pieces but ran to 24,000 words in total.
Collectively they constituted, I believe, a strong, factually based argument, drawing on a variety of inter-related indicators, which showed that an international financial crisis was imminent. Indeed the final paper (November 2005) was entitled Eight Reasons why a Global Economic Shock is Inevitable by end-2008.
Since I had regular official contact with most of the senior managers in the department, I expected my warning to receive serious consideration, but it was completely ignored. I couldn’t get a workshop or an internal debate of any kind.
At a meeting with three senior managers I was told that, while the risk factors which I had identified were plausible, there was not the slightest possibility that they would receive a hearing at a political level.
Most managers appeared to expect a gradual tightening of credit on the international markets and a manageable levelling-off in Irish property prices. No one seemed willing to entertain the possibility that the alternative, the sudden onset of a major international credit crisis, would have catastrophic implications for the Irish economy. In fact, even a more modest contraction than that which occurred in 2008 would have caused serious problems for the Irish banking system, the property sector and the public finances.
This failure by the department was not due to any lack of economic expertise or to an inability to comprehend the alleged complexity of the issues involved. To understand the problem we must look elsewhere.
In my submission to the Wright committee, which reported on the department’s performance over the period 2000-2008, I made the following observation:
“The government had no incentive whatever to take corrective action. It was reaping a colossal revenue windfall, most of which it then channelled into current expenditure. As an egregious violation of the most basic principles of economics, this is probably impossible to beat. Many commentators bleat about the need for greater specialist skills in economics and financial management in the department, but this is nonsense.The mistakes that were made had nothing to do with skills. They were due rather to the appalling inability of the department to impress upon the government the sheer recklessness of its policies [emphasis in the original].”
In the course of my seven papers, I made a number of observations about the world financial system that strongly suggested that a global credit crisis was looming, with dire implications for the Irish economy. For example, the volume and complexity of financial derivatives was growing so quickly that the true market value of the underlying assets could easily – and advantageously – be misrepresented.
Furthermore, the big institutions had no incentive whatever to give an accurate profile of the risks associated with each asset or asset class. Interest rates in the United States and Europe were far too low, leading to market distortions, property bubbles and a serious misallocation of capital. The failure of the US to support the dollar – despite the rhetoric – was rapidly eroding confidence in its reserve currency status.
The price of oil could go in only one direction and, with ongoing US involvement in the Middle East, continuity of supply would become a strategic target in its own right. Debt instruments were increasingly being treated as risk-free securities and traded so widely and so rapidly that serious exposures could quickly accumulate in a given sector. This meant that, if a major international bank over-reached itself, it could drag a number of others down with it before the authorities had time to intervene.
The US was showing such an appetite for direct military intervention, and a perverse willingness to commit itself to significant and unquantifiable costs in several theatres of war at the same time, there was not the slightest possibility that its budget deficit would fall below $500 billion, and could well reach a trillion within a few years. (It is now 1.5 trillion and rising.)
With a 40 per cent fall in its industrial capacity in just 25 years, a staggering and unsustainable trade deficit, and a massive burden of unfunded liabilities (social security and medicare), the US economy could only be held together by a dangerous expansion of its money supply (“quantitative easing” is now in full swing).
Given that the financial sector accounted for 35 per cent of corporate profits (up from 15 per cent in 1975) and the irresponsible removal of important legal restrictions on the kinds of activity that financial institutions could engage in, the opportunities for trading recklessly in a rapidly expanding money supply would prove irresistible. This in essence was the main thrust of my argument.
I strongly recommended that the State run a large budgetary surplus for up to six years and build up a substantial sinking fund to reflate the economy after the tsunami struck; that the availability of credit to domestic borrowers be greatly curtailed; that the National Pension Reserve Fund (NPRF) switch heavily into commodities and precious metals; that a far greater proportion of the national debt be denominated in dollars to take advantage of its inevitable significant fall in value; and that the major financial institutions be urged to reduce their exposures to the markets that would suffer most when the tsunami struck.
The running of budget surpluses over a five- to six-year period would also help greatly to mitigate the fiscal impact of the coming tsunami.
With reference to the NPRF recommendation, gold has since risen 225 per cent, silver 445 per cent, nickel 120 per cent, cotton 290 per cent, rubber 230 per cent, tin 390 per cent, palm oil 200 per cent, cocoa 135 per cent, and coffee 125 per cent. (As my wife said when she read this paper: “That says it all.”)
Regarding its statutory role, the department traditionally saw itself as the last line of defence against the predations and venality of a self-serving political caste. In the course of the 1990s, however, as the public coffers expanded, a polar shift occurred and the department began to see itself merely as a provider of “advice” to the government. Its defensive role was forgotten.
It is probably fair to say that, thereafter, whatever the politicians wanted, the politicians got. The department had no vision of its own for Ireland, nor any sense of the dangers lurking in deep waters. It had ceased to stand as a bulwark between the people and the politicians and had become instead an obedient arm of government, with no mind of its own.
I feel this is a fair analysis and one which the generality of hard-working civil servants in the department would find acceptable.
The failures leading up to the crisis, however, were well and truly matched by some dreadful errors after it struck. Just as the department had failed to stand up to a rampant, irresponsible government in the run-up to the crisis, it failed thereafter to face down the sharks and jackals who control the international banking system.
The self-appointed and well-concealed elite who run Brussels will continue to siphon off the wealth and sovereignty of the Irish people until they awake, throw off the appalling shroud of apathy that envelops them and shout, “Enough!”
We owe nothing to the international bankers. Our public assets are ours and will remain in our possession.
They call us PIIGS (Portugal, Ireland, Italy, Greece and Spain) because that is what you do with a pig: tie him upside down, slit his throat and drain him dry.
Well, I for one reject this disgusting epithet. I also reject utterly the despicable arrogance with which this country is being treated, and the servile ineptitude of those who pose as our leaders.
Unless we take a stand and defend our sovereignty, our integrity and our children, we will be destroyed as a nation.
ROBERT PYE BIOGRAPHY
ROBERT PYE worked in the Department of Finance for 31 years and achieved a variety of senior positions within it, retiring as an assistant principal.
Between 1995 and 2009, Pye was involved in strategic management co-ordination. This included working as secretary to the assistant secretary group, the principal officer group, and the departmental partnership committee.
He was responsible for co-ordinating the preparation of all statements of strategy, published by the department since 1997, as well as all progress reports on them; the department’s official risk management strategy, its framework of assignments of responsibility for all officers at principal level and above, and all progress reports on change management developments and initiatives across the department.
He also held responsibility for co-ordinating the preparation of the department’s annual output statement for the Oireachtas Finance and Public Service Committee and organised the department’s annual conferences between 2000 and 2007.
In October 2010, Pye made a submission to the review panel established by the then minister for finance Brian Lenihan to examine how the Department of Finance had performed in the previous 10 years.
The review, which reported in December 2010, was chaired by Rob Wright.
In his submission, Mr Pye said he declined at least three offers of promotion between 2000 and 2008 for personal reasons and “because I had long been concerned at the extent to which the department is influenced, if not controlled, by the political system”.
“I greatly enjoyed my work and found it both challenging and rewarding, he told the Wright review. “I was allowed a high degree of autonomy and, for the most part, there was a clear willingness on the part of management to both hear what I had to say and to give it due consideration. Many of my ideas and suggestions over the years were implemented. . .
“I feel it is important to provide this career-related information in order to establish that I am well qualified to comment on the department, its workings and its management. As it transpired, very few people would have had such a broad overview of the department or such regular contact with the top three layers of management over such a long period.”
Pye’s academic qualifications include an MA in logic and psychology (1980) and in 1986/87, he was the TK Whitaker Fellow with the Economic and Social Research Institute.
Pye is 55 and lives in north Wicklow with his wife and two daughters.