70 Billion Bank Bailout Most Expensive April Fool in History


On the 1st of April 2011 the government got in on the April Fool's game early, by announcing yet another visit to the trough for the endless bailing out of the country's basket case banks to the tune of 70 billion euros. Anyone remember when Brian Lenihan swore on his life that 40 billion was definitely the last of it? My how we laughed...

The truly desperate twist to the tale is that this is no joke. During the bubble years from 2000 to 2007, UK, German, US and other banks fell over themselves to invest a truly stupendous 5 times the annual GDP of the country into the reckless property game being played by the Irish banks and developers. When the bubble burst the then government decided that the losses of these greedy but guiless investors should be guaranteed by the population as a whole.

Since then the resulting bankruptcy of the state has meant the reliance of both state and banks on the European Central Bank for operating loans that cannot be got from markets which are effectively closed to Irish institutional borrowers. This is now concretised in the ECB\IMF Memorandum of Understanding that dictates a savage and ruinous austerity programme, guaranteed to doom the Irish economy to over a decade of debt-deflation and depression.

Yet, to add insult to injury, the politicians and right-wing media in Germany castigate Ireland as the author of it's own misfortunes, and that they don't see the reason to bailout profligate state spenders like Ireland, Greece, Portugal and Spain. This self-serving line is the truth turned upside-down. The reasons for the imposition of ECB direct rule on the "profligate" P.I.G.S is to deflect the losses of German investment banks onto the Irish population. This attempt to firewall the losses made by the investment banks of the European core onto the peoples of the peripheral countries where these banks sought high rates of return in the bubble years, is unsustainable. Greece, Ireland and Portugal each have less than 2% of the Eurozone's population, to make us pay for the losses of the investment capital of the entire Eurozone, is mathematically impossible.

It is not only the self-appointed opionators of the Irish press that bemoan the injustice of our fate. Even staunch representatives of international capitalism such as Mohammed El Erian, CEO of the world's largest bond investment firm, and Martin Wolf, the chief economics commentator at the Financial Times, express their incredulity at the burdens being imposed on Ireland and the other peripherals. Wolf saying in a recent FT open-ed piece "...the idea that taxpayers should bail out senior creditors of massively insolvent banks at such risk to the solvency of their state is both unfair and unreasonable."

Here we see the current constitution of a Bankers Europe, based on the narrow interests of the financial capitalists who appropriate our commonly produced wealth, rather than one based on the equal needs of all of Europe's peoples, who collectively create it. Today these two different models of building a common European home confront us as the injustice being inflicted on the peoples of the periphery in Ireland, Greece, Portugal and Spain. But tomorrow we must fight for a European commonwealth based on equality and social and economic justice for all.

WORDS:Paul Bowman