Fianna Fail and the IMF con job


Talk about fiddling while Rome burns! Fianna Fail are worse than the ancient Romans ever were.
On paper this country is almost bankrupt. We face an enormous challenge to avoid that paper bankruptcy becoming a tangible reality. We don't have any time to lose in the battle to retain our economic independence.

And what have the senior members of the government here been doing for the past week? Squabbling over whether Taoiseach (Prime Minister) Brian Cowen should remain as Fianna Fail leader, that's what.

The matter was finally wound up on Tuesday evening at a meeting of the Fianna Fail parliamentary party, when Cowen survived a vote of confidence in his leadership.

A week of internal convulsion in Fianna Fail came to an end. Cowen said he was now ready to lead the party into the election in a few weeks and defend his record in very difficult times.

He was up for the fight, he said. It sounded almost like a victory.

Well, I've got news for Cowen and Fianna Fail. Nobody cares. We're way past the Tweedledum or Tweedledee stage in Fianna Fail now.

As far as most people here are concerned, it doesn't matter which of them leads Fianna Fail, which collapsed to 14% support in the last national opinion poll and is headed not just for opposition but for political annihilation in the election.

It doesn't matter because the problems are much bigger than any Fianna Fail politician can handle. Their record to date shows that. And they are not going to be in power to handle the problems anyway.

It doesn't even matter to most people here which opposition politicians will follow Fianna Fail, because there's not much sign that they will be any better. We are where we are, as our politicians are fond of saying.

And where we are is up to our necks in debt, saddled with an enormous International Monetary Fund/EU loan to keep the country going while a program of savage cutbacks in state spending is implemented. We're in a dire situation, and there's no sign of the leadership we need to get out of it.

Over the past few weeks, many people here have begun to rethink their attitude to IMF/EU loan that "saved" Ireland at the end of last year, and to the state guarantee given to the Irish banks back in 2008 that precipitated the crisis that made that loan necessary.

The initial perception was that there was no alternative to taking the loan on the terms offered. We were unable to borrow on the money markets, and the state only had enough money to keep going for another six to nine months. The alternative to the loan appeared to be financial breakdown with the collapse of many state services.

The €80 billion IMF/EU loan facility that was given to us came at a time when the international money markets wanted 9% to lend to Ireland, effectively ending the state's ability to borrow.

Even with the cutbacks it's going to take a few years to get our deficit down to an acceptable level, and before the IMF and the EU stepped in it seemed certain that we would run out of money long before that could be achieved. We're spending one-third more than we raise in tax revenue and that's a huge gap to close quickly.

The nightmare scenario of schools or hospitals closing was close. That was unthinkable, so there was some degree of gratitude here when the IMF/EU came in with the funds and offered us a lifeline.

But the public attitude here to this is now changing. Increasingly, the unlimited guarantee given by the state to the Irish banks and the terms of the IMF/EU deal are being questioned by commentators.

From respected economists to newspaper columnists to the ordinary man in the street, the mood has shifted from acceptance to skepticism. The feeling is growing that we made a horrendous mistake in giving a blanket guarantee to the banks back in 2008 and that the IMF bailout is a con job.

The blanket guarantee to the banks effectively transferred all the debts of the Irish banks to the state and that, coupled with our yawning budget deficit, was what turned the markets against us. We could have handled the deficit alone.

But the huge bank debts on top of the deficit convinced the markets that the Irish state was potentially another Greece, or even another Argentina. So they stopped lending to us.

We now know that the Irish banks effectively pulled the wool over the eyes of Cowen and the Minister for Finance Brian Lenihan when in September 2008 they talked the government into giving the blanket guarantee to cover all bank liabilities. A run on some Irish banks was imminent, and the two Brians panicked and gave the banks a blank check.