Ireland has taken on austerity measures which have sent the economy into a nosedive. Property prices are collapsing and the owners of ordinary houses who became millionaires are once again indebted paupers. Salaries are falling, and unemployment surging.
The reason for all this is to maintain the credibility of, not Ireland, but the Euro.
As the economy shrinks faster under the burden of austerity, the government’s revenues fall, which in turn requires further austerity. There is no end to this vicious cycle.
The endgame can only be one single event, and that is to quit the Euro and default. That outcome is forbidden as of now. Ireland’s government is locked in to the Euro and the EU by the successful corrupting of its politicians. The EU understand the locking in effects of the corruption game.
For the people of Ireland, there is only one solution, to vote in a nationalist government, which will throw out the Euro, default and relaunch the Punt. The earliest election will be in two years time. In the meantime the Irish people can only suffer.
The FT – Ireland will emerge finally from a deep economic slump later this year but the costs of mending the Irish banks will weigh on growth prospects for several years to come, the International Monetary Fund said on Wednesday.
In its annual report on the country, the IMF endorsed the Irish government’s austerity plans but warned that the authorities may need introduce further fiscal tightening if the goal of lowering the budget deficit below 3 per cent of gross domestic product by the end of 2014 is to be reached.
The Irish authorities’ budget cuts and bank rescue plans had eased concerns about the economy but maintaining the credibility of the international markets would require continuing vigilance, according to the Fund.
“The appropriately ambitious fiscal consolidation plan demands years of tight budgetary control. Likewise, the weaning of the banking sector from public support and its eventual return to good health will proceed at only a measured pace,” the report said.
Ireland’s 10 year bonds rose to 5.5% yesterday. Regardless of elections, if the markets begin to scent that Ireland’s austerity measures cannot save the situation as the debts are simply too vast, and a default is getting more likely, the rising trend in rates will continue. Either politics or markets, or a combination will force a solution.
Or events in other countries. A setback to the Euro rescue programme could happen at any time in many European countries, either a bailing out country like Slovakia deciding to abandon the bail-out or making it as good as useless by demanding ridiculous terms, or by another insolvent country like Greece being forced into default by events, or other events nor foreseeable. The only possible outcome will be some kind of collapse. The longer it is delayed, and the less it is prepared for by EU politicians with their heads buried in the sand, the worse it will be.