ECB needs to take notice of people power

George Soros has probably never been to Ballyhea and neither have members of the ECB council.

The latter, in particular, should climb out of their tower in Frankfurt and catch a bus to the north Cork village. There, they could better appreciate what is happening in the Irish economic psyche at present.

If you read the international financial media about Ireland, it is referred to in glowing terms. Those wizened Irish have turned up their sleeves, accepted the hard road to recovery and leaned in to the storm of debt induced recession across their society.

While thousands emigrate each month, the hardy Irish are living proof EU states can muster the will and determination to restructure their economies and take the tough but necessary decisions that will right size the economy for the long-term. This, we are told, is evidence of the Irish spirit of doggedness and our commitment to the European project.

This presentation of the Irish stance towards the euro crisis needs to be aggressively challenged. For sure, our current spending had grown to levels that exceeded tax revenues, accentuated by excessive pay increases and too much public sector employment. That imbalance simply has to be corrected if any independent economy is to have a long term and viable future.

This explains why new entrant pay levels to teaching, nursing and gardaí are being lowered. It is a tough adjustment that cannot be avoided in a grown-up democracy. This, however, is an entirely different point from the mountain of bank-related debt that sits on top of Irish society.

Soros is not some doe-eyed sentimentalist with a grá for the Emerald Isle. He is, rather, a hard-nosed international financier who made billions trading currencies and other financial assets. At the World Economic Forum in Davos, Switzerland, last week, he said: “It is patently unjust that the Irish people should absorb all the losses made by the banks and that the bondholders should be totally free, and that I think will have to be modified.”

This is a remarkable and insightful comment. It comes from someone who fully understands how bond markets work. His point reflects exactly the sentiments expressed by (please excuse any patronising inference here) ordinary people in Ballyhea and Charleville.

Their peaceful, yellow posters, saying enough is enough on bank debt, is a telling and important grass roots initiative. I hope it is free of party politics too as this crisis has been seized on by some for narrow political gain. We need leaders who can leave their petty ambitions outside the door when this issue is being debated.

While Soros has got the message, it is crystal clear that the ECB has not. This institution, which many once believed was a credible and positive force within the euro, is now behaving like a monolith that can choose to treat a small population with disdain. Reports that ECB members are opposed to extending the maturity of Irish bank related debt is, in this context, beyond contempt.

It was the ECB, lets remember, that played a key role in shoe-horning Ireland in to a bank bailout that was directly connected to preserving a modicum of stability across the euro.

It was the ECB that presided over a regulatory culture that encouraged and facilitated what is now understood as reckless lending around Europe. And now it is the ECB that has the arrogance to obstruct a nation’s effort to pay off this debt via longer maturities.

Here’s hoping that Ballyhea evolves in to something much bigger. A mass movement of peaceful demonstration aimed at the ECB is needed to augment support garnered from the IMF and the European Commission.

It is only by arming our political leaders with the weapon of people power that the Central Bank of Europe can be brought to its senses.