Tag Archives: Ireland Bail Out

Death and Taxes

Benjamin Franklin in a letter to Jean-Baptiste Leroy in 1789, stated that

‘In this world nothing can be said to be certain, except death and taxes.”

While not wanting to speak ill of the dead, for the late Brian Lenihan the certainty of death is now is all too apparent, yet because of his calamitous decision to give a blanket guarantee to our banks when the financial crisis came to a head in September 2008, for the rest of us, the certainty of taxes will remain for a very long time indeed. Taxes on our homes, taxes on our wages, taxes on our water, taxes on our fuel, taxes on generations to come, and all as a result of a decision taken in in secret, without consultation or accountability, by a small group of bankers, economists and political leaders.

The recent outpouring of grief and the media love-in over the death of Mr Lenihan concentrated on the man’s personal courage in the face of death, and his affability and generous personal nature.  He was, we were told, a man of the people. Though I did not know him, I am sure that all of this is most likely true. However HSE statistics show that on the same day as Mr Lenihan passed away, close on one hundred people in total died in Ireland. I am sure that much could be said of the personal courage and affability of many of those people also, but they will have died in relative quiet in comparison to the huge coverage afforded to Mr Lenihan, for they were ordinary people, perhaps not as important to society as one such as Mr Lenihan. Nonetheless, history will record that Mr Lenihan, along with a select few politicians, economists, civil servants and bankers, is unique among us as being the only person who signed away our nations future by lumbering us with the debts of reckless and criminal bankers, a future which, had he listened to the advice given at the time by Merrill Lynch a consultancy company whom the Government hired and paid 6 million to for a few days work and who advised him against a blanket guarantee, might have lead us to a much different place today. So while we can mourn the passing of Brian Lenihan the man, we must also face the fact that Brian Lenihan the politician, due to his actions on that fateful September night, played a huge personal part in the destruction of our economy and our society and ensured that whatever about the certainty of death, the certainty of taxes will remain with the rest of us ordinary mortals for generations to come.

For Mr Lenihan at least, these certainty’s  are no longer a worry.

Ronan Gallagher

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THE BUTTERFLY EFFECT

Somewhere in the world a butterfly flaps its wings. This seemingly insignificant action causes a tiny fluctuation in the earth’s atmosphere which sets off a train of events that over a period of time, results in a massive tornado occurring somewhere on the other side of the planet.

‘The Butterfly Effect’ is an elegant explanation of ‘Chaos Theory’ a strange and complex mathematical equation which essentially says that everything on the planet is interconnected and even the smallest fluctuation in the system can have far reaching, unforeseen, and sometimes devastating consequences.

It is a theory that our leaders here in Ireland and in Europe would be wise to take cognisance of as the current path which Irish and European citizens are being forced down by largely unelected and unaccountable mandarins, is of far more significance than a butterfly’s wing flaps, and if the Chaos Theory equation is applied to our economic and political system you can be sure that the resulting hurricane will have hugely devastating and as yet, unforeseen consequences.

One such consequence could be the break up of Europe and a reversion to insular nationalism which could put us right back to Europe pre 1939. Am I being ‘alarmistic’, as an unfortunate former Minister once put it? Should we be stocking up on our iodine tablets? Well, let’s see how such a scenario might play out.

As the debt contagion spreads throughout Europe, more and more of her people are being burdened with the debts of the banks and the bond holders who invested in them. Whatever one’s position is on this, there is absolutely no doubt that these debts were incurred through reckless, negligent, and possibly criminal behaviour by those banks and an abject failure on the part of bond holders, auditors, regulators, Governments, and the ECB to recognise the dangers of ‘bubble economics’ and take action to correct it. Having failed in their duty to the citizens of their countries, and the citizens of the wider Europe, these same leaders guarantee to pay these private bank and bond holder debts and place the burden on the shoulders of their citizens. In an attempt to ensure that these debts are paid and to further certain right wing ideologies, these elite groups inflict austerity measures that bite deep into the pockets of citizens and further contract already shrinking economies resulting in rising unemployment and unsustainable personal debt with devastating social, political, and economic results.

Already we are seeing these ripples of unrest spreading throughout Europe. In Spain a social network revolution not unlike the ‘Arab Spring’ managed to bring thousands into the capital Madrid’s Puerto del Sol square to camp out in protest at Spain’s rising unemployment and growing economic crisis. In Greece there is rising political and social unrest and increased defiance of the imposition by the Greek Government of IMF/EMU austerity measures and the forced sale of strategically important state assets. Portugal has just negotiated its own bail out with austerity measures to follow and Spain and Italy, both on extremely shaky ground, could be next. How will the citizens of these countries react to their loss of sovereignty when unavoidable austerity measures are imposed on them to pay for the debts of the banks, and the failures of their own Governments and European leaders? And what about Germany whose people have been told (wrongly in my opinion) that their taxes are being used to bail out countries such as Ireland, Greece and Portugal? Notwithstanding the fact that German taxes are ultimately being used to bail out German banks who recklessly gambled on Irish banks such as Anglo Irish, a fact which is not being made clear to them, people in Germany cannot be best pleased if they believe that they are being asked to pay for the excesses of others in what now seems like a failed European experiment.

There are those who will say that my above description of what is being done to the citizens of Ireland, Greece, Portugal and what will be done to other European countries whose economies also fail is too simplistic, that it’s too black and white with no allowance for grey areas, but no matter what nuance or spin you put on it, the core effect of what is happening with the IMF/EMU bailout deals is that private commercial debt is being burdened on the shoulders of the citizens of Europe at the same time as we are going through the worst recession since…well, since 1939.

The current recession with its crushing and unsustainable burden of debt, with no growth, no hope, rampant unemployment, economic uncertainty, and the social and political unrest which all that brings with it, is fertile ground for an upsurge in nationalism. The perceived injustices of pouring huge debts on the citizens of Europe to pay for the excesses and failures of others disconnects its citizens from the political system and enhances the growing view that Europe is more interested in serving the interests of big business and less and less in serving the interests of its citizens. This disconnect serves only to foment growing resentment among Europe’s citizens, erode the union’s authority and leadership, and diminish its relevance to its citizens thereby creating a void in European politics. Who knows, perhaps as in the 1930’s, under such circumstances a ‘charismatic’ leader or leaders, swept to power on a nationalist anti European agenda, might rise up from the ashes of an economically ruined Europe to fill that void. The reason given for Europe taking the path it has chosen to take during this economic crisis is to hold the union together; however as the chaos theory equation demonstrates, the possibility of the exact opposite happening is equally as likely.

And we all know where that led to in 1939.

Ronan Gallagher


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