At least we’re not alone in our financial woes
From Ireland’s perspective there is some comfort to be gleaned from the realisation that we are not alone. Our crisis is bad, indeed very bad, but Portugal, Greece and Spain are not light years behind us. In some respects, Ireland is in a stronger position in the sense that we have a more diversified economy than the others, with the multinational sector standing out in particular. The key problem for Ireland is that we have massive private sector debt, steadily escalating government debt and a dysfunctional banking system that is effectively bankrupt but for the generosity of the European Central Bank.
Ireland is now centre stage in a mounting crisis for the eurozone. The whole eurozone project is creaking at the edges and is now being steadily exposed for the flawed structure that it is. Imposing a single interest rate on a range of very diverse economies, without political and fiscal union was a recipe for disaster.
I worked in Bank of Ireland in the run up to the commencement of EMU in 1999. I was a very vocal opponent of the whole EMU project and Ireland’s participation in it. This was not a popular or wise stance to take in a financial institution that was more interested in staying on the right side of the political consensus, rather than acting in the best interests of Ireland. The mantra was always to say the right thing rather than being right in what you say.
I was instrumental in bringing Bernard Connolly to Dublin in February 1996 to speak at an EMU seminar. He was an EU official who was sacked following the publication of his book, The Rotten Heart of Europe in 1995. His book exposed the deeply flawed construct of EMU and he spoke at great length in Dublin, with great clarity and with incredible prescience about the project. He did not go down very well in official Ireland.
Following a scathing presentation to Britain’s House of Lords committee on Ireland’s early performance in EMU, I had little choice other than to leave Bank of Ireland. I still find it incredibly ironic that the very politically correct institution, along with the other banks, would later go on to cost the Irish taxpayers vast amounts of money. The Nyberg report this week shows just how rotten the whole system has been.
I am not sure how Ireland will emerge from the current crisis, but I am sure that the taxpayers of Ireland will have to endure huge pain for some years to come.
My sense of despair was further heightened this week with the revelation that the former AIB chief executive received €3 million for his efforts in 2010.
The former minister for finance and the board of AIB who sanctioned this payment should try rationalising this payment to the public sector workers who have had their pay slashed over the past couple of years; the thousands of private sector workers who have lost their jobs altogether; the taxpayers who will be paying for the crimes of the banking elite for years to come; the AIB shareholders who have seen their investment wiped out; and the 2,000 AIB employees who will be made redundant over the next couple of years.
The so-called doyens of the free market in the banking sector abused the system and got bailed out with a golden parachute.
I am increasingly despairing of Ireland’s future. To endure the pain that we will all have to endure, leaders with moral authority will be required. Unfortunately, such moral authority is in very short supply and will be further eroded by this week’s revelations in AIB. This is a very dangerous set of circumstances for Ireland’s future social stability and solidarity.
