Good riddance, Herr Stark!

The unwelcome intervention by Jurgen Stark, departing member of the Executive Board of the European Central Bank, in Ireland’s budget debate, calling on the Government to cut public-sector pay and social welfare, displayed an extraordinary arrogance on the part of an unelected German official. His intervention met with an uncharacteristic rebuff from Éamon Gilmore that underlined the anger felt even in pandering Government circles. “Our agreement is with the institution,” Gilmore told reporters. “It’s not with individuals within it.”

Since the beginning of the year Ireland’s sponsors in Europe and the IMF have approved the release of loans totalling €30½ billion. Tens of billions more are to come. Stark warned that sentiment could suddenly turn against Ireland all over again. To guard against that, he said the Government should quicken its austerity drive and tackle no-go topics such as public and private-sector pay and welfare entitlements.

In doing so may simply have been a stalking horse for the EU and IMF—an influential man about to hand in his notice.

Nevertheless, this should be a timely warning for workers, welfare recipients, and their families, who must begin to resist the accelerating rounds of austerity that threaten to reverse the meagre gains of the last couple of decades and land us back in 70s-style poverty once again.

Iceland out of the woods!

The New York Times reports that Iceland is no longer under an IMF programme. A report from the IMF pronounces that the “adjustment programme” was successful.
www.imf.org/external/pubs/ft/scr/2011/cr11263.pdf

Iceland still has high unemployment and is a long way from a full recovery; but it’s no longer in crisis. It has regained access to international capital markets, and has done all that with its society intact.

And it has done it with very heterodox policies: repudiation of debt, controls on capital, and depreciation of its currency. And it has worked. We would be much happier with an unemployment rate that Icelanders consider high!

“We were told that if we refused the international community’s conditions we would become the Cuba of the north. But if we had accepted we would have become the Haïti of the north.” 

No-one told them there was a third option: default.

“During the first Icesave elections we were told that if we rejected the deal to pay, all credit lines would stop, we’ll be isolated from international society, the sky would fall, and there would be chaos in the streets. This came directly from the government ministers. When we rejected, nothing happened.

“Second time around, this time we had the best deal we could possibly get and it would spark an international feud, we would go to an international court and be forever indebted should we reject. The finance minister did interviews warning us."
 

“We rejected again. Nothing happened. And the last time I heard, we taxpayers don’t have to pay anything close to what was said initially, maybe nothing at all!”

The IMF report says:  

“Over the medium term, moderate growth is projected, led by investment and consumption. However, uncertainty about the sources of growth continues to weigh on prospects. Iceland is endowed with abundant natural resources, but the use of these resources remains an issue of intense public discussion. There has been considerable interest in new investments in power-intensive sectors, but technical and financial obstacles remain a challenge.”

So now, what’s the difference between Iceland and Ireland? The answer might be that Iceland is not completely out of the woods but is getting there.

Contrast Ireland, which is saddled with odious bank debt for at least the next generation.

Don’t mind the ESRI!

Government plans to publish ESM bill, EU-IMF bill and household charges bill before the end of the year

The Government plans to publish a number of bills during the current Dáil session, including a number arising from the EU-IMF programme.

The Department of Finance will publish five bills in the coming months. The Fiscal Responsibility Bill will provide a statutory basis for a range of fiscal policy and expenditure management reform, while another bill will enable Ireland to ratify the treaty establishing the European Stability Mechanism. The European Financial Stability Facility (Amendment) Bill and Euro Area Loan Facility (Amendment) Bill will enable Ireland to ratify agreed amendments to the EFSF framework agreement and the Greek loan facility agreement, and will be introduced as soon as this week.

Among the other important bills to be published are two from the Department of the Environment. The Local Government (Charges) Bill will impose an annual household charge on owners of residential properties, while the Water Services (Amendment) Bill will establish a system for inspecting and monitoring the performance of septic tanks and other onsite waste-water treatment systems.