The Irish government has suddenly complicated the picture by requesting debt relief from as a reward for upholding the integrity of the EU financial system after the Lehman crisis, though there is no explicit linkage between the two issues.Will, Not May
"We carried an undue burden for protecting the European banking system from contagion," said finance minister Michael Noonan.
"We are looking at ways to reduce the debt. We would like to see our European colleagues address this in a positive manner. Wherever there is a reckless borrower, there is also a reckless lender," he said, alluding to German, French, British and Dutch banks.
Mr Noonan hinted that Dublin is asking for some of interested relief on a ?31bn EU promissory noted linked to the Anglo Irish fiasco, among other matters.
Mr Noonan said Ireland's public mood has turned very sour.
"We have indicated to Europe's authorities that it will be difficult to get the Irish public to pass a referendum on treaty change," he said.
Mr Noonan said the country will stay the course with unbending austerity, even though nominal gross national product (GNP) has already contracted by 22pc. Public wages have fallen 12pc on average under Ireland's "internal devaluation" policy to regain competitiveness within EMU. There are likely to be further wage cuts in the December budget.
"We have to face reality. There is no painless way, no soft option: we're going to cut spending drastically, but with social cohesion. We don't want situation we see in Greece with people on streets and the foundations of state under threat. We're not going that route."
Pritchard summed up the entire situation quite nicely in his opening lead "Europe's plans for treaty changes to enforce fiscal discipline in the eurozone may fall foul of popular anger in Ireland unless the EU creditor states agree to share more of the pain."
My one quibble is with the word "may". The correct word is will.
I am quite disappointed that it took Ireland this long. Voters smashed the Fianna Fail (FF) party to smithereens in February (see Massive Rout in Irish Elections; Collision Course with the EU; Default the Best Option for Ireland), to teary-eyed outgoing politicians, only to see incoming party Fine Gael, led by incoming prime minister Enda Kenny, do the exact same thing FF would have done: bail out German and French banks at the expense of Irish taxpayers.
Quite frankly this is maddening. What the hell good are elections if the only choice by either party is to bail out the banks? Worse yet, in Ireland's situation, it is foreign banks that are bailed out.
Enda Kenny "Pleads" for Help
Actually, Kenny did not "demand" debt relief, he begged for it. Moreover he is willing to kiss ass to get it.
The Wall Street Journal reports Irish PM Kenny: Must Meet Targets To Win Back Economic Sovereignty
Ireland will have to meet the austerity budget targets set by its bailout lenders if the country is to get its economic sovereignty back, Irish Prime Minister Enda Kenny said Tuesday.If Kenny had any backbone at all he would have told the IMF and EU to "go to hell" just as Icelandic voters did and more importantly, just as Irish voters expected. Instead, Kenny wimped-out to the exact same demands from the IMF and EU that Fianna Fail would have done.
He told the Irish parliament that looming budget measures will be as fair as possible to balance the requirements of its European Union and International Monetary Fund lenders while protecting the most vulnerable in Irish society.
"Clearly, if we are to have our economic sovereignty back we can't go on as we were," Kenny said.
Public Mood Turns Sour
Mr Noonan, Ireland's finance minister said "Ireland's public mood has turned very sour".
Of course it has. Wimps like Kenny and Noonan have caved into every EU and IMF demand, at the expense of Irish taxpayers, in spite of an overwhelming election to do something different!
I repeat what I said earlier today in Eventually, Will Come a Time When ....
Eventually, there will come a time when a populist office-seeker will stand before the voters, hold up a copy of the EU treaty and (correctly) declare all the "bail out" debt foisted on their country to be null and void. That person will be elected.
Kenny did not do what he was elected to do. He should be kicked out of office on his ass and replaced by someone who will.
Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com
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Mike "Mish" Shedlock is a registered investment advisor representative for SitkaPacific Capital Management. Sitka Pacific is an asset management firm whose goal is strong performance and low volatility, regardless of market direction. Visit http://www.sitkapacific.com/account_management.html to learn more about wealth management and capital preservation strategies of Sitka Pacific.
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