More Thoughts From An Irish Farmer
A week may be a long time in politics, but it seems to be even longer in euro-economics. At least the long-standing debate here about how we should celebrate the 100th anniversary of the 1916 rising is now resolved. All we need do is raise the EU flag over the GPO. This has been a bit of a standing joke since we were sent back to the polls to get our views 'correct' on Nice and Lisbon, but yesterday it became reality when Ollie Rehn told us we could not hold an election before passing the budget. In other words, we cannot elect leaders untill the EU has set the program which those leaders will adopt. Brian Cowen was willing to comply because it gives him a chance of postponing the inevitable election till march by which time some of the blind rage against him and his party may have abated- not to the point of saving his position, but possibly sufficient to save Fianna Fail from literal extinction. The Donegal by-election tomorrow will show exactly why Fianna Fail prefer surrender to the EU over surrender to their electorate.
So what next? Debate here in Ireland seems to revolve around two issues. Firstly, is the bail-out big enough? Opinion among those who have been proven right so far says no- it needs to be nearer double the 85bn being suggested. Opinion among those who have been consistently wrong so far (such as the government) says yes, it is big enough. Secondly, can we afford it? If the figures being bandied around at the moment are in the ball-park, our ongoing interest obligations are going to be around 10bn a year. Our current tax take is about 30bn. I think that clears up that one.
Portugal may be under fire at the moment, but I don't think the ECB will allow 2 economies to fall in quite such quick succession. They will buy every single portuguese bond
in the market if they have to. So what next is that Ireland will publish it's 4 year plan and it's budget, and will elect new puppet leaders in the new year. The ECB will see off the speculators at any cost. But some time next year, when the fact that the Irish can't live within the terms of their bail-out resurfaces, and the fact that Portugal is still in trouble resurfaces, the speculators will be back. I guess George Soros will be among them this time, and those of us who were around in 1993 know what that means. The Germans will keep their strong currency policy and the weaker economies will default by devaluation and inflation. It is worth observing that all the current expertise in the euro hierarchy has no experience of managing a currency union through a second decade, because no currency union (in the absence of political union) has ever lasted that long. Between them they have no experience at all of managing the break-up of a currency union, so that will be a pretty rudderless ship when it finally slips it's anchor.
My conclusion is that we will only survive these turbulent times if we remember to keep eating. Enjoy your lunch, and don't forget to plant next year's spuds in the the spring, because you can't be sure anyone else will plant them for you.