(Originally Published on Corkstudentnews.com in October 2010)
We are being watched. Every move we make and everything that we say is being analysed down to the last letter. Even our reaction to these analyses is being watched. One would think that I am describing something, as clichéd as it has now become to do so, out of George Orwell’s 1984. However, the truth is far more insidious. When I say we are being watched I mean the Government and the country at large is being watched. The people doing the watching are the people in the money markets. They are expecting everything to come crashing down around us any day now and as a result, the cost for us to borrow money on the international money markets has soared. What no one can be certain of is when this collapse will finally hit us.
The initial collapse started two years ago when the bubble on which our economy was based finally burst. Our entire economy was based on a lie; the lie which was houses continually being built and then sold to people who simply couldn’t afford them. There was the illusion of demand and because of this, our economy is still floundering in the doldrums whilst the majority of the developed world is moving forward and out of the recession, albeit slowly. Instead we are now saddled with the debt which rightfully belongs to the banks. They are the ones that gambled with their money by lending it to developers invested in the housing market which was propped up by a false sense of demand and constantly increasing prices. It was a classic case of a housing bubble that had been seen in before, in particular in Japan in the early nineties. Whilst I see this as the beginning of the economic collapse in Ireland the politicians would lead you to believe that the collapse only involved the housing market and nothing more. Ever since two years ago the economic dominoes have been falling in an ever increasing manner but the people in power want to keep this from us. The problem is that they are failing and every day it is now becoming more and more clear just how precarious our situation has become and is becoming.
The total cost of bailing out Anglo Irish has now been finalised with Minister for Finance, Brian Lenihan, now declaring that some “finality has been brought to the matter”. The cost has now been calculated to be €34 billion of the taxpayer’s money that will be paid by you, me and future generations of Irish people. This massive debt has been firmly placed on our shoulders. The problem is that this so called final price may not in fact be final at all. There are those who think that Anglo will cost even more than the €34 billion that was declared last week. Peter Matthews, an independent banking consultant, believes that Anglo will in fact cost €42 billion simply due to the amount of unrecoverable losses, in the order of 58% of their loans, which they will inflict on the country. The simple reason that the government is doing this is in order to cover up, as best they can, their own failings and the fact that they are trying to protect themselves and their cronies. In two previous articles, I referred to the politicians, developers and bankers as PODS. They are one homogenous entity which for all intents and purposes is sucking the life blood out of the country in order to prolong their own financial gain. All you have to do is look at the figures.
At the start of the bank guarantee the government declared that the cost of bailing out Anglo Irish would “only” cost €4 billion. Then it announced that it would take another €6 billion and then another €10 billion until we have now reached the latest bailout price of €34 billion. Added to this is the fact that on the day the final cost of bailing out Anglo would cost €34 billion was announced, the government became the majority shareholder in A.I.B by buying 70% of their shares for €3 billion when on the very same day they could have bought all of A.I.B for €600 million. The government paid 500% more than the market price for all of A.I.B just to have a hold on 70% of a barely functioning company. At the very same press conference Brian Lenihan commented that A.I.B will be “restored to its former greatness”. If all of the above doesn’t paint a clear picture for you then let me spell it out. This bank bailout isn’t about rescuing the country and it never was. It was all about maintaining the status quo of the PODS and nothing more. The problem with their plan is that the bond markets are aware of what they are trying to do. As I have said, they are watching us closely. This is why the interest rate on Irish bonds reached just over 6.5% less than two weeks ago. They have since receded somewhat to 6.27% but all of this clearly shows that the financial markets know exactly what is going on with regard to the PODS in this country. They know that things will soon reach a climax and as soon as the interest rates hit 7%, we will be in Greek territory and the IMF and/or ECB will have to be called in. According to Lenihan et al though, everything is fine and the markets have confidence in the stability of the Irish economy when in reality they know full well that we are headed further and further down the black hole of ever increasing debt.
Lenihan has tried his best to keep up this pretence from the get-go, which one can argue is his job as Minister for Finance, but that doesn’t excuse his complete disingenuousness when it comes to informing the Irish people of just how bad things are. In the weeks before the blanket guarantee on the banks in September 2008, he accused economist David McWilliams of “dangerous talk” when McWilliams said that the banks were unstable and were not likely to last much longer. Even as recently as this weekend we had Minister for Tourism, Culture and Sport Mary Hanafin, declaring on radio that McWilliams had “accused the government of treason” and called it “scandalous” when he said that “the establishment I mean the top civil servants, the bankers, the brokers who make money out of us going into debt, the legal firms who are being paid to give economic advice and as far as I’m concerned they don’t have many economists there. They all have a vested interest in preserving the status quo, and the status quo is that we will be good little people and not cause too much problems”. The status quo is being preserved by the PODS. McWilliams can see this, the financial markets can see this and a few others can see this yet the government will deny it even after it is finally removed from office. In the meantime it labels economists like McWilliams, who was one of the few people warning us about the impending economic collapse as early as 2003, as a “dangerous talker” and “pop economist”. God forbid that someone actually tells the truth for once about the economic machinations of our so called democracy.