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Women Mean Business, Winter 2013-14

Posted by Jill Kerby on December 20 2013 @ 17:29

 

REJOICE, REJOICE! IT’S A NEW YEAR AND A RECOVERY - IRISH STYLE!

 

Let us raise our glasses to the Great Irish Recovery, 2014. 

A new year; a new beginning.

I don’t know about you, but I can’t wait. The past six years have been a complete bummer and I’m sick to death of the Great Recession.

Isn’t it just amazing how the whole world now believes that our plucky little nation has turned itself around from basket case debtor to sterling world stage performer after just three years.

So enough of the cynicism and gloom. A quick recap shows that Ireland: The Economy has emerged from the grim, but paternal scrutiny of the EU, ECB and IMF fiscal examiners.

By lending us €64 billion they allowed us to avoid not just the banks (well, most of them from failing being shut down, with losses to depositors and the all important bondholders, but also – we are told - a mass walk-out of foreign companies, mass unemployment, catastrophic debt and price inflation and god forbid, the return of the punt.

Later they even approved an additional €33 billion Anglo Irish promissory note, to be repaid in 18 yeas, which has resulted in a bit of let up on the Budget austerity accelerator.

Without the bailout, the experts insist, no one would have ever lent to us again an we would have become just another third-world economic basket-case like… Iceland!  And worst of all – the ATM machines would… have… closed.

Whew. Talk about a close call.

Instead, for the greater good of Europe’s banks its bondholders, we bit the bullet. A troika of real, flesh and blood men (whom the Merrion Hotel must be very sad indeed to see depart) sacrificed three of the longest years of their working lives to make that Brussels/ Frankfurt/New York business-class flight to Dublin every quarter, come rain or shine.

Without them, 260 economic, financial and fiscal errors of our ways would never have been identified; tens of billions of public over-spending would never have been slashed, the fiscal deficit would not be on courser to reach that magic 3% by the end of 2015 and politicians and higher civil servants would not continue to enjoy salaries and pensions far in excess of the common citizen.

Of course, there remains the small matter of reform of the health service, the legal profession and the fragile health of the retail banks and their burdensome tracker mortgages. (Funny how the ECB inadvertently made this worse by cutting its base rate to 0.25% in November.)

                          *                               *                                  *

Three years ago we were unable to pay our bills, not just as they were presented, the definition of insolvency, but not at all - the definition of bankruptcy. 

The success of the bailout, said the Minister for Finance as the Troika departed means we are ready to go back into the lion’s den of the global money markets and by 2015 start borrowing the many billons we will still need to run the state.

You may think, like I did, before I read all about The Recovery, that borrowing yet more debt when you appear to be hugely indebted is… well, not very smart.

Silly me. Our great economists keep reminding us simple folk that debt is an integral part of every modern democratic state. (Well, perhaps not Norway.)

Creditors understand all about deficit spending and they don’t expect to ever be repaid their capital because sovereign debt is perpetually rolled-over, just like your car loans, and creditors don’t mind being paid in debased and devalued fiat currencies endlessly printed by government central banks.

Unfortunately in our case, with no access to the ECB money printer we must repay the interest payments through cutbacks, taxation, confiscation of wealth and future income and savings of our famous “unborn”.

How much debt is there, you wonder?  As of mid-November 2013, the General Government Debt was €205.9 billion, according to the national debt managers, the NTMA. At the end of 2007 it was just €47.2 billion and at the end of 2009, just before the Troika’s arrival, €104.5 billion.

That GDD were also serviced by annual interest payments of just over €7 billion in 2013, which will rise by over a billion a year until about 2016, when the by then €211.6 billion GDD will start to fall quite dramatically.

We can thank austerity and higher taxes to not just make the economy more productive by then, we are told, but wait for it …they say that global and European economies will also finally out of the post-2008 slump.

Go 2016! 

The Recovery should mean the ending of mass unemployment and emigration, the return of solvent banks and lending, decent returns for savers, the end of the mortgage and personal debt catastrophe, lots of new jobs and rising incomes, the lowering of penal taxes, the retreat of the black economy, the rebirth of devastated small towns and communities.

We can look forward to the fixing of antiquated water treatment and supply services, the upgrading of the national electricity grid and renewable energy supplies; the roll-out of superfast broadband needed in every corner of this small island.  Reform of the health service, better services for the disabled and destitute and more investing in education research and development will happen.

Lifting the great burden of debt on ordinary taxpayers – 70% of whom are employed in the SME sector -  will bring the growth that modern economies cannot survive without.

The Recovery might even mean that you might even be able to retire some day. 

Our national purse has been returned to us, the delighted Minister for Finance reported to the Dail.

We reluctantly gave it away three years ago and then it was ransacked and fitted with a device that will permanently monitor what goes into it and how much goes out. 

But no matter: the train called ‘sovereignty’ left the station a long time ago, he reminded us, when we collected our ticket for membership of the euro-club.

                                

                        *                                  *                                 *

We are now the marvel of the financial world.

The Government has exceeded in its tax collection target for 2013. The Troika signed off knowing that 2014 will be another bumber tax year with full year property tax, a bigger pension levy, 41% Dirt on deposits, 4% PRSI on ‘unearned’ income, higher excise duties on most of the ‘old faithfuls’, a bigger contribution from the sick for their prescriptions and less tax relief for pension fund holders and two million private health insurance members.

On top of this, they’ll get paid first, no mean feat given that there are 300,000 fewer taxpayers today than in 2009.

So who am - or you -  to challenge this amazing scenario?

Didn’t Herr Schaeuble, the most powerful UE finance minister of them all say back in October that ‘Ireland did what Ireland had to do. And now everything is fine’?

 

But…but…

Just in case he’s being a little premature… just in case those marvellous crystal balls the economists on Merrion Street, in Brussels and at the ECB use are slightly off kilter… just in case the 1.87 million of us in work have a few off-months before 2016… you might want to ease up on those plans to buy that new yacht, that mansion in Malaga and diamond tiara.

You are not a euro-state, you know.  There’s no central banker at your elbow guaranteeing that you are exempt from the honest pursuit of bankruptcy if you can never repay your debts. Stick with living within your means for a while longer.

Still, we’re borrowing with the big boys again.

And the NTMA, ESRI, OECD, DoF, ECB, EU, IMF, the Wall Street and City power brokers are believers… and they’re backing us 100%...er, until they don’t.

Hey, this is The Recovery. Whether you like it or not. 

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