EDITORIAL : THE INDENDENT, IRELAND

         

 

Let's avoid fear -- and delusion

In the wake of the revelation that we are now to foot the bill for the numbskulls who bought a Bulgarian bank for €216m and sold it back to the fortuitous girlfriend of the Bulgarian prime minister for €100,000, the Irish taxpayer is entitled to ask is there any limit to the indignities we must suffer?

Circumstances such as this mean it is difficult to respond positively to the equally surreal spectacle of Michael Noonan urging us to reacquaint ourselves with the old Celtic Tiger ethos of 'shop until you drop'.

Yet there is merit in Mr Noonan's position, for Ireland, having embraced every other economic fallacy, is in danger of falling victim to 'the paradox of thrift' where the desire of a frightened people to save more than they spend does more harm than good. Today we need only look at our deserted villages to see just how much damage can be done to the living economy of the main street by the dead economy of the safety deposit box.

But whilst fear and cynicism will only hasten the downhill road to default, we must not embrace the delusional politics of mindless optimism either. Mr Noonan was, however, guilty of that vice when he claimed that ending the preferred creditor status of the ECB in any future bailout represented some form of diplomatic triumph. The minister's position may have brought Michael Collins' famous 'stepping stone' speech to mind but only in the sense that this latest EU 'concession' is only a stepping stone to nowhere.

Changing the methodology by which our reparations to Germany are paid may secure a stay of execution, but only at the cost of an extension of the torture.

Even if we do finally get back to the bond markets all that will happen is that our appalling overhang of debt will be privatised. We will merely be exchanging 'Frankfurt's way' for the diktat of Goldman Sachs.

The reason Irish people are not spending is that Europe's Alice in Wonderland-style attempts to persuade us to believe half a dozen impossible things every day is not working. Until a final solution to Europe's existential crisis is reached it is delusional to believe that Ireland's fiscal crisis, or that of Greece, Italy, Spain and Belgium, can be resolved by the cowardly politics of kicking the can (and the future of the misfortunate Pigs) down the road. Either some form of managed default, or a trillion or two of fiscal liquidity to help the austerity medicine go down, will have to be negotiated as part of an EU-wide banking settlement before the frightened Irish public will open their purse strings.

Many will believe Mr Kenny's apparent status in the polls is another example of how we appear to be experiencing a summer of delusion. We should, however, not be too cynical. Mr Kenny is not a 21st century 'Liberator', but whilst his political caution can be as agonising as it is self-interested, the care with which the new Cosgrave picks his steps may actually suit the need of this country to steer a careful course between excesses of delusion and cynicism.

The Government's record has been equally speckled. But for every Shatter, and his embarrassing desire to crack down on crime correspondents rather than white-collar crime, there is a Howlin. Optimists will hope that the bustling ambition of the latter means this could yet turn into the summer of reform where the State will be cast in a better mould.