The Company Store

What is the strange hold she has over Enda Kenny?

One reason a lot of people will vote for the upcoming “austerity amendment” is that they assume it must, when it all comes down to it, be good for us. Sure it’s going to hurt, but in the long run it will help us have a stronger, better economy – right? It’s a natural assumption. And it would be dead wrong. The wholesale destruction of government spending if we succeed in making its insane deficit-slashing timetable – or the fines if we fail – will shrink the economy precipitously. Disastrously.

But why would the EU want to do that to us? It’s puzzling, but it’s not out of any personal animosity. We are but a small cog in this, and we don’t squeak half enough. It’s just that it’s a one-size-fits-no-one set of strictures that would burden even the healthiest European economy.

The Fiscal Compact has two main objectives. The more obvious one is to outlaw the sort of behaviour that got Greece into trouble – essentially, excessive public borrowing and spending. But note that that’s absolutely not what we did. We were good. We paid back debts when we had the money, we ran a surplus. And though our public spending rose, the highest it ever went was still only the Eurozone average. Very arguably we should have been spending well above that, our public services were still grossly underdeveloped even at the height of the boom. Yet this referendum will have the effect of cutting public spending more drastically than ever. And aside from hurting our most vulnerable, that will of course crush the economy even further. As I said a few days ago, it is the cure for the opposite disease to the one we have.

The second and more covert purpose of the compact though is, putting it as crudely as it deserves, to save Angela Merkel’s political future. In order to win her next election – she has about a year and a half left to go – she needs to convince the German people… Not that the Euro is good for them, no. That’s not enough. That the Euro is the Deutsche Mark. A currency run to Germany’s peculiar rules, for Germany’s peculiar circumstances.

Which are peculiarly set against Keynesian economics, the (well-proven) theory that the best thing a government can do in times of economic depression is borrow and spend to promote recovery. This technique lost favour in Germany essentially because it was employed by Hitler. In the Post-War era a new orthodoxy was needed, and they found it in “Ordoliberalism“, a system in which government must play only the most minimal role. It has worked for Germany so far, but Germany has been in almost continuous growth since it started. That might seem a recommendation, but ordoliberalism is a theory for the good times, utterly lost when facing a crisis of these proportions.

It seems likely that only the introduction of the Euro averted the failure of the German system. From being overburdened by the costs of Reunification with the post-Communist East, Germany went rapidly back to being the richest and most productive economy in Europe. Essentially, by selling more goods than ever before to the rest of Eurozone – while simultaneously lending us the money to buy them.

Germany had become Europe’s company store.

It is worth noting that Merkel’s approval rating is at an all-time high back home. She’s getting to project herself as tough by beating us up. So why is Enda Kenny agreeing to this? Is there some secret backroom agreement where he gets to be her bitch now in return for favours down the line? It’s the only way you can make sense of his apparently acting against the country’s interests. But we can’t depend on the existence of covert deal. Even if it exists, it can so easily be repudiated. And in return we are being asked to write vows of poverty into our own Constitution.

If this referendum passes, the best thing you could do would be to get out of the country as soon as you can. And be sure to bring your more vulnerable relatives with you.

Unclean

It's all about projecting a market-friendly image

Enda Kenny just rang the opening bell on the New York stock exchange. He spoke for many of us I feel – indeed, for his whole country – when he uttered the immortal words “Me love you long time, five dollah”.

OK, possibly not his exact phrasing, but we won’t quibble over details. The gist of his appearance was that the country has invested in a new tub of lube and we’re ready once more to give the markets what they want. What did we learn from our recent, unhappy affair with global capital? That we’re a bottom, it seems. Not a lot else.

The Taoiseach is there to assert that we’ve put our financial house in order. Pretty much. Well, it’s still in a subsidence zone, but compared to some neighbouring houses it’s very very well propped up. That’s all fine, but what about Wall Street’s house? Foolish borrowing and mismanagement of the euro were factors, but it was the unstoppable flood of credit that washed away the foundations and caused the entire economy to slide into the sea. And that all began with the wilful pretence that bad debt could be magically turned into a good investment – basically, a confidence trick.

Shouldn’t it be Wall Street ringing the bell?

Private Profit, Public Punishment

loan shark... 218365
Image by paloetic via Flickr

Is it true, as Taoiseach Enda Kenny said at Davos, that Ireland went mad with borrowing?

Far from it. We went mad with lending. A very different thing.

No seriously. The Taoiseach’s choice of words suggest that it is right for the public as a whole to have to pick up the tab for this, because we bear a collective moral responsibility for it – by going a bit mad. Whether he intended it or not, this is insulting nonsense. For a start, many were too sensible to borrow more than they could afford. Others were too poor to be lent money at all, even with the lax standards of last decade.

Some of us were both.

People did not suddenly become extra-greedy last decade for no apparent reason. People were always greedy, and until recently banks made their money by exploiting these human desires – but exploiting them sustainably. This changed when they managed to convince themselves that they could turn a profit on less secure lending.

This is not to exonerate people who borrowed recklessly. It’s still foolish behaviour and people should not be rewarded for it. But neither should the rest of society be punished. The idea that this could all have been avoided if the public had, en masse, just budgeted more sensibly is patently ludicrous. It was the lenders who had their hands on the control valves; they precipitated the crisis.

They, and of course the people who encouraged these lending practices by investing in them. Bondholders, as we call them.

Address To The Nation

Enda Kenny making a speech in the Burlington H...
The Taoiseach, saying things. For some reason

The country stood by today as our leader Enda Kenny addressed the nation – only the sixth time in history that a Taoiseach has done such a thing. His speech left but one question on lips across the country.

What the hell was that for?

The speech contained much that would have been bad news, if it had been news. It was depressing, sure, but confusingly it did not contain the really awful tidings that would have justified its existence. So it’s pretty much as we expected.

No mention of any welfare rates being further cut, but no mention of them not being cut either. So expect that.

Direct taxes will not be raised, but indirect will. In other words, money will be extracted not just from those who have it, but rich and poor alike. Or as Enda put it:

“I wish I could tell you budget won’t impact on citizens in need, but it will.”

It seems the poor and sick aren’t actually going to be rounded up and shot though. Presumably they’re dying off at a rate sufficient to give markets confidence in our government’s international-finance-friendly ruthlessness.

The highlight I think was when he told us that the economic collapse was not our fault, even if we were all going to have to pay for it. Nice of him to mention that I suppose. We did know though.

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China, The Vatican, And Ireland

Pope Benedictus XVI at a private audience (Jan...
I'll Get You For This, Kenny

This is priceless. Our Taoiseach‘s recent outburst against the Vatican has been taken up by the official Chinese media – which is not really a different thing from the Chinese government – in support of its campaign against the Catholic Church.

What campaign? Well basically, the government think they should appoint Catholic priests, rather than the Catholic hierarchy. Much as they have an ‘official’ Dalai Lama, etc. Ain’t that an interesting idea?

Wow, I really don’t know which way to jump on this one. Much as I think the Vatican should basically not do anything anywhere at all, a state-appointed priesthood is an extraordinarily totalitarian idea.

Well OK, the English invented it. But that was back when England was really very totalitarian. It’s as opposite to the separation of church and state as is possible. On the other hand, I think it would be great if Catholics in Ireland cut ties with Rome.

It’s a power struggle between two quite different yet equally objectionable powers – when I think about, probably the two most powerful absolutist regimes on Earth. And now Enda Kenny is caught in the middle.

Maybe I’ll just get some popcorn and enjoy this one.

Vatican City Limits

From Roma with love
Ideally, it should be in a hollowed-put volcano

What I hate about the Vatican is their holier-than-thou attitude. It may not pretend that it’s above error, but it continuously insists, to us and to itself, that even if it does on occasion do harm it ultimately achieves a greater good.

Look closely at the logic of that. The more harm the Vatican does therefore – whether it be protecting paedophiles from the law or impeding the prevention of AIDS – the more good it must be doing. The benefit of its existence must outweigh these ephemeral evils. To think otherwise would be to confront a truly appalling vista.

And if the good the church does must inevitably outweigh the bad, then preserving it and its power in the world must surely be worth more than the safety of a child. Or any number of children.

This kind of ruthless logic is what makes religious organisations last for thousands of years while kingdoms and empires rise and fall.

But when an Irish politician unequivocally condemns the actions and the attitude of the Vatican, you know that times are changing. Addressing the Dáil, Taoiseach Enda Kenny said:

The rape and torture of children were downplayed or ‘managed’ to uphold instead, the primacy of the institution, its power, standing and ‘reputation’.

Couldn’t have put it better myself really. Well maybe stylistically, but the content is spot on. He continued:

. . . a report into child sexual-abuse exposes an attempt by the Holy See, to frustrate an inquiry in a sovereign, democratic republic . . . as little as three years ago, not three decades ago. And in doing so . . . excavates the dysfunction, disconnection, elitism . . . the narcissism . . . that dominate the culture of the Vatican to this day.

Broadly speaking, he tore them a new one.

Hight time, and popular support is overwhelming. Irish new media publication TheJournal.ie did decide to give space to a priestly apologist for the Catholic church, but I think that was mainly to give the rest of us a target. His point though, if the metaphor is not unfortunate, was that we should not throw the baby of the church’s teachings out with the bathwater of its failings. Society needs a spiritual dimension, and the church has contributed much of practical value too.

I’m not going to argue against the social utility of religion – not today at least. For the moment I’ll accept the assertion that people, some people at least, require or benefit from religion in their lives. The question that still remains however, which I would like to ask this apologist, the Vatican, and every cleric who put the instructions of the Vatican before the safety of children: Why does that religion have to be Catholicism?

There are many other faiths. Heck, there are even many other forms of Christianity. Perhaps people in Ireland who wish to practice a religion should choose one that has sinned less.