The Irish Economy
Commentary, information, and intelligent discourse about the Irish economy
Sea of Debt
September 30, 2013, Michael Taft
‘There are different ways to measure debt – as a percentage of GDP, GNP, etc. But let’s measure it as a burden on people – for its people who pay off debt. When we look at debt per capita this is what we find: [see graphic]
Ireland is at the top [€40.000], head and shoulders above all other countries – in particular, Italy, Greece and Portugal which the Fiscal Council refers to as countries with a higher debt when measured as a percentage of GDP. Why the difference?
Taft continues: ‘Many might conclude that our debt is not sustainable. In a rational world that might be true. But this is Ireland. Sustainability is not just an economic concept; it is a political one as well. If people believe, however reluctantly, that there is no alternative but to repay ‘our’ debts (‘our’ includes the debts of insolvent and non-existent businesses), then it will be ‘sustainable’. We will tax ourselves beyond levels which the economy and households can afford. We will suffer spending cuts – both nominal and real (i.e. after inflation) – beyond any levels contemplated in Europe. We will force the economy to become the handmaiden of debt-repayment. It can be done – provided you are willing to suffer high levels of unemployment and deprivation, maintain the investment crisis, and drive wages and incomes downward.
Unfortunately, there is a political regime here in Ireland that wants to prove there is no debt that cannot be repaid even if have to wreck livelihoods and life-chances.
And people will be left to scramble for a life-raft, a buoy, a piece of driftwood – anything that will keep them afloat in the sea of debt. But most of all, they had better learn to swim.’
Banking reform must be high on ECB agenda
The well has run dry and winding up bust banks without involving EU taxpayers is overdue, writes Colm McCarthy
“… try this: ‘We have assessed Bank XYZ, it is bust and we have no plans to do anything about it.’
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