In an article published on May 21 in the British current affairs and politics magazine, New Statesman, the editor of BBC2’s Newsnight programme, Paul Mason, concluded with the following sentence:
“So phase three of the global crisis poses the following danger: that the fiscal stimulus of the past 18 months produces bankruptcy at the level of nation states; that the markets demand austerity to prevent it, creating in the process debt-deflation and, with it, social unrest. This is particularly bad on the continent with the strongest labour movement, the highest ethnic tensions and the longest history of revolt.”
A day later in The Irish Times, the Professor of Economics at University College Dublin, Morgan Kelly, predicted that Ireland would be a prime candidate to suffer “bankruptcy at the level of nation states…It is no longer a question of whether Ireland will go bust but when,” he bluntly wrote, identifying the stupefying amounts of taxpayers’ funds transferred to save the banks as the catalyst.
On May 20 in the New York Times’ Economix blog, there were further warnings. Peter Boone is a research associate at the London School of Economics and Simon Johnson is a former Chief Economist at the International Monetary Fund. In their blog, they baldly outlined the seriousness of Ireland’s economic and financial situation and concluded, “These numbers make Ireland look similarly troubled to Greece, with a much higher budget deficit but lower levels of public debt.” The two commentators conclude that “if the government hopes to avoid a sovereign default, the one overriding priority should be to stop bailing out the banks.”
Among others, former Chief Economist with Ulster Bank, Pat McArdle, was trenchant in his criticism of the UCD academic. On RTE’s Morning Ireland, he repeated a charge that people like Kelly and Peter Boone had “isolated, extreme views” and were, as the Financial Times claimed, AA “Cassandras.”
Mr. McArdle should take greater care when looking for figures from mythology to put down people of opposing views. According to the Greek myth, the god Apollo conferred acute powers of insight and prescience on Cassandra. When she displeased him, he condemned her never to be believed and to be powerless to prevent the dangers she foresaw from actually occurring – but her prophecies were invariably accurate!
Morgan Kelly was equally attacked three and four years ago when he concluded, from a study of dozens of property booms in the OECD countries, that the Irish one would collapse disastrously. The attacks, however, were from those with a vested interest in the property bubble while more of us outlined our agreement and also outlined the dire consequences for the public finances and public services that would follow such a collapse. And so these things came to pass.
As is clear from the earlier quote, the Economix commentators believe the Irish government should halt shoveling money into the banks to bail them out. Professor Kelly strongly agrees. They are also strongly in favour, though, of the savage programme of cuts being imposed on working people as another part of the strategy to overcome the crisis with the UCD economist describing these as constituting “reasonable steps to bring the deficit under control” and the other two as “the tough fiscal steps that will be required under any circumstances.” This is, of course, because they accept the continuation of the current system as the only option open to society.
On the basis of the present policies, however, further and deeper crisis looms. As we know, the savage cuts in Ireland have been extended to Greece. Now Portugal and Spain are following. The United Kingdom is but the latest to announce swingeing cuts. On the basis of sharply deflationary policies, how can these countries stimulate economic growth which would rapidly increase income to the public purse to pay back loans and restore public services? Years of stagnation and a double dip recession are more likely.
In each of the countries worst affected by the crisis, it is the ordinary working people, pensioners and the unemployed who are paying dearly. The slashing and burning of living standards and public services is being coordinated at European level with the EU Commission acting as the enforcer.
What is inexcusable is that the representatives of the victims of these policies see no need to coordinate or link up with a strategy of opposition and to fight for an alternative. It is shameful that the trade union leaders are not actively building active solidarity between working people in the different countries leading to joint mobilizations to stop the juggernaut and to put an alternative policy in place determined by the needs of the majority rather than the preservation of neo-liberal capitalism which plunged Europe into the morass in the first place.
CHECK OUT OTHER RELATED ARTICLES:
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- Morgan Kelly’s diagnosis is broadly correct but his remedy is wanting
