Before we vote on Thursday, I think it would be useful for us all to reflect on exactly why the bond markets won't lend to us at present. Is it because of our structural deficit?
No, of course it isn't. It's because we already owe so much that lending us more money seems like a risky bet.
It wasn't always like this. As recently as 2007, Ireland had the lowest debt to GDP ratio in the European Union. If our debt was at similar levels now, we could borrow without difficulty, at competitive rates, and this crisis would still be a problem for Europe, but not one that Ireland was at the centre of.
We're in a bailout programme because the markets looked at our decision to put the debts of private banks onto our national balance sheet and said to themselves "you can't afford to pay that back". It's that simple.You don't need to be an economist, a genius, or a politician to understand that. We owe more than we can afford to repay, and what we owe is not money that the Irish Government ever borrowed to begin with.
This treaty doesn't deal with that issue, which is why, regardless of how you vote, it won't work. It's not going to improve our economic situation, it's not going to restore confidence, it's not going to help you or your children find a job -- how can it, when it doesn't deal with the problem? That's why the Government is not even pretending that there's a positive reason to vote for it. There simply isn't one.
Instead, we're told that we should vote for it because -- as I explained above -- the markets think we're too risky to lend to, so our only source of funding is the as yet unestablished -- and even when it is, chronically underfunded --European Stability Mechanism (ESM). In other words, their mistake has been so huge, and on such a historic scale, that we've given up all hope of ever being able to correct it and return to the markets, so instead, here's a pretend bailout fund for when we need it. They think you're scared enough to fall for it.
The problem is that the ESM is an even worse disaster waiting to happen.
Let's begin with the obvious -- the ESM does not have enough money. Even with €11bn of Irish money pledged to it (which we don't have), and huge amounts from other member states (which many of them don't have), it's still hundreds of billions, at minimum, short of what will be needed to bail out Spanish, Italian, Portuguese and possibly French, Dutch and German banks.
I asked Eamon Gilmore repeatedly to say on the record that there would be enough money to bail out Ireland (again) on RTE's Frontline debate on Monday night. Each time, he refused.
So, it doesn't have enough money. That's not even the worst bit -- the worst bit is the fact that this ESM, as constituted, is completely above the law. It has almost limitless power, and complete legal immunity. No court, no force of law, no police force can ever oversee it or question its decisions. We're creating a loan shark that will be desperate for funding, and giving it unlimited unaccountable power. That's not a leap of faith, it's downright foolhardy.
After we do this, there is no going back. We will have tied the hands and feet and tongues of every future Irish government. If we vote ourselves into this, there's no way to vote ourselves back out.
It asks us to reduce our debt as a percentage of GDP -- but at the same time, it actually consigns us to policies that will reduce our GDP by pulling more and more money out of the economy, and increases our debt by consigning us to almost perpetual borrowing.
The only way for any business or household to get out of a mess like this is to come to some arrangement that reduces the outstanding debt. We simply will never get out of this trap while we're paying back other people's bank debts. That's increasingly recognised, which is why at the EU summit last week it was agreed to set a date for discussions on changing the deal around the treaty -- June 28, four weeks after our vote.
Four years ago, Fine Gael voted for the bank guarantee. That was the decision that got us into this mess by transferring billions of other people's debts on to the backs of you and me. When asked why Fine Gael voted for it during the election last year, Michael Noonan said: "We voted for it because we didn't, at the time, know the full facts."
We don't know the full facts now. We know that the French and Germans have delayed ratifying this until the end of the year. We know that they want changes and modifications to it. We know that the only thing they agree on between them is that there should be a European harmonisation of taxes, and the introduction of job-killing financial transaction taxes. We know that they've agreed a date to work out these changes -- a date that's after our ratification, but before theirs. We also know that the first member to ratify this treaty was Greece, so we know its formula doesn't work to save those succumbing to it.
We've already had Fine Gael make one colossal mistake because it acted without knowing all the facts. Let's not help it make another one. Vote No on Thursday, it's the calm and sensible option. We can do this later in the year when we know what we're actually voting on and when we've seen what it is that "Europe" will do to address the death sentence to Irish growth, which is bad-bank debt saddled on every man, woman and child in this country, and that was never ours to begin with.
Finally, remember this, transferring fiscal sovereignty away from Ireland, to people and institutions you can never hold accountable, is a repudiation of all the values and principles that our country was founded upon. No one else in Europe is getting the chance to have a vote on this failed formula. Democracy needs to matter in Europe, let's make sure we remind everyone of that fact at the ballot box, while we still can.
Original article can be viewed here