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"...public opinion deserves to be respected as well as despised" G.W.F. Hegel, 'Philosophy of Right'

from Ireland to Europe « Previous | |Next »
November 25, 2010

As expected the Irish government's austerity budget involves deep spending cuts and tax increases to help pay for its banking crisis and meet the terms of an international rescue deal.The plan includes tens of thousands of public sector job cuts, phased increases in the VAT rate from 2013, social welfare savings, reduced minimum wage.

The result of a process that places private bank losses on to public balance sheets is that it could leave its governments insolvent too.

BellSIrishbailout.jpg Steve Bell

Things are going to get much worse for the Irish than they already were. The great hope is that the 12.5% rate of corporation tax – preserved after a fierce fight with the EU – will continue to attract multinationals to Ireland to counter the deflation and stagnation and to provide economic growth to reduce the debt load. Paying down past debts, is nearly impossible through austerity alone.

Ireland will hobble along for years.The bailout (ie., loan) may last about a year because the toxic loan mess is greater than the E85billion bailout. Then the Irish would would be back to the current scenario – broke – with another year of austerity behind them. Given the fundamental unsustainability of the austerity-and-full-repayment strategy, will there be a democratic pushback and a rejection of the bailout and its austerity conditions?

Belgium has joined Portugal, Spain and Italy on the hit list of countries that may be heading for financial crisis, as the international bond investors are viewing them as living on borrowed money and borrowed time. The script in the next few days and weeks in the markets will follow a similar pattern to Greece and Ireland – denial, more denial, EU confusion, market panic and a bailout. Spain is the key.

Will Germany allow the eurozone to collapse? practice, if not in title, there are already two different eurozones: a Germanic, northern one, including Germany, Austria and Finland, and the weaker, threatened peripheral states, such as Greece and Ireland. About all they have in common is a currency, and perhaps not that for ever.

| Posted by Gary Sauer-Thompson at 4:48 PM | | Comments (1)
Comments

Comments

Privatise the profits... socialise the losses.

It's the same old game. The only difference is that, this time, there's not even the slightest attempt to hide it. What we're seeing is a massive shift of wealth from the weak and disengaged to the influential and organised.

Of course none of this matters because major sporting events will continue to be broadcast on free-to-air. Hurrah. A victory for the masses!