Mick Wallace (Wexford, Independent)

I also welcome the comments made yesterday by Professor Honohan. It would have been a lot better if the European financial system had dealt with the banks' problems rather than passing them on to citizens. The notion of turning private debt into State debt has been the root of most of the present crisis.

It has been an interesting time in Europe for a while, and the last few months have been no different. Without doubt the strongest statement coming from Europe in recent months has been that politicians are out of touch with the people they are supposed to represent. The policies are not working, the method of government is not working and the people are certainly not working. We have seen an upheaval right across Europe.

It is disingenuous of the Taoiseach to say that he is all in favour of French president-elect Hollande's approach to the problem and to the fiscal treaty, given that we have rolled along with everything so far. Whatever the Germans have told us, the Government says: "Oh yes, that's the best for us; and if a growth pact comes along, sure grand, we'll take that too".

Clearly, however, Mr. Hollande has a few other ideas just to show that he is a little bit different. Prior to his election, The Economist magazine said that he was a rather dangerous individual who genuinely believes in the need to create a fairer society. My God, that is something to worry about.

He is also in favour of eurobonds, although I do not see the Germans agreeing to that idea. What he is really seeking, however, is an acceptance by Germany that the intra-euro area imbalances are two-sided. The reason the periphery overborrowed is because the German financial system overloaned. The imbalances still exist and the Italians have been at pains to point that out lately.

In Italy, the economics spokesman for the PDL - the largest party supporting Mario Monti's technocratic Government - Mr. Renato Brunetta, said it was "intolerable" that Germany could finance its debt at costs below the level of inflation, while the rest of Europe was paying on average three percentage points more. "We cannot give as a gift this competitive advantage to Germany. This is provoking the destruction of the European club," he said, adding: "If there is not a commitment by the European Council in June to amend the fiscal compact, it won't be ratified."

Italy is probably only at the start of its problems and given the manner in which it is going about fixing them I fear for the Italian people. We do not need to discuss Greece, given that two thirds of the people there have clearly said "No" to austerity. In addition, it will not be long before the Dutch have their say in September when fresh elections take place there.

Spain has become the new basket case. Next week it will be two years since Zapatero's socialist Government adopted the first austerity measures and passed a series of structural reforms. These measures brought about the electoral suicide of the Spanish socialist party. Now the conservatives find themselves in a similar situation. Little more than 100 days after gaining power, they have alienated citizens by pushing austerity well beyond their electoral mandate only to find themselves as heavily penalised by the great financial markets as Zapatero was.

It is true that the markets are making life difficult for the Spanish Government, but that is no surprise. What is outrageous is that while Spaniards face recession and soaring unemployment, the Bundesbank president, Jens Weidmann, who is also a member of the European Central Bank's council, states that above 6% interest rates for Spanish sovereign debt are not the end of the world. I am sure they are probably not the end of the world for Germany, but they are surely not making things easier for the Spaniards.

Austerity has no doubt taken a larger than expected toll. Demand is falling for loans to businesses and consumers despite ECB action to help the region's banks. The confidence fairy seemingly does not exist. The notion that by slashing spending confidence will return to businesses and consumers, and that they will all start spending again, has been blown out of the water at this stage.

This Government promised to be different from the Fianna Fáil-Green Administration, and was elected because of that promise. If there is one thing that stands out for the people more than anything else, however, it is that this Government is the same as its predecessor. People do not see any difference. That is why 50% of the people refused to pay the household charge because they are disillusioned beyond all belief. They were so glad that an election came around last year so that they could change things at last. They thought they would change things by putting Labour and Fine Gael into government, yet they got more of the same.

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